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Our Bureau

Mumbai, July 8

Abolition of Fringe Benefit Tax (FBT) has been welcomed by most in corporate India, which was widely perceived as more of an irritant for companies.

Worse, India Inc says it did not benefit the exchequer too.

“It was a tax which was yielding peanuts to the department, and was an arduous task for accountants. Besides, it is painstaking even for the department to go after small ticket items. Hence it was a win-win,” said Mr Sanjay Pai, Chief Financial Officer, Plethico Pharmaceuticals.

Pfizer India’s Head, Mr Kewal Handa, called removal of FBT as a “bold step” and Mr D. G. Shah of the Indian Pharmaceutical Alliance, condemned it.

Mr Vinod Wadhwani, Director, Ambit Corporate Finance said “It was a no brainer”.

For some sectors, elimination of FBT remained the only piece of news. Mr Kuljit Singh, Partner, Ernst and Young said, FBT will ease pressure on the otherwise high costs of domestic carriers. “Also, foreign airlines otherwise not required to pay income taxes in India, had to pay FBT resulting in increased cost and compliance,” he said.

However, with much sought after demands such as declaration of aviation turbine fuel under declared goods remaining unaddressed, airlines were not impressed. SpiceJet’s CEO, Mr Sanjay Aggarwal, said that it would have “very little impact” on the carrier’s business.

Disappointment writ large on hospitality and tourism sector as well, which was very positive about getting infrastructure status in this Budget, but had to settle with only removal of FBT. “There is shortage of two lakh rooms and even then the demand for infrastructure status (by hotel sector) has once again been turned down,” said Mr S. P. Jain, Managing Director, Pride Group of Hotels.

It’s time for the employees to weep over the FBT. Employees Stock Option Scheme came under the ambit of FBT, which was paid by the issuing company. However, it will now be taxed as a pre-requisite under “salary”.

The tax will be borne by the employee, with the tax being deducted at source from his salary.

More Stories on : Taxation | Maharashtra | Budget

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