The Hindu Business Line : India Inc ready to implement FBT

Mr M.R. Rajaram, CFO, ICI India Ltd, said that the company was geared up to fully implement the FBT. "There are some areas of concern like superannuation. Also the clarifications from the Government on some aspects such as what would classify as "training" have not come. Once the clarifications come, the confusion pertaining to FBT would be less. We don't feel there is a need to postpone the deadline," he said.

Mr Rajan Varma, CFO of Dabur India Ltd, also sounded optimistic about being able to find a way to abide by the FBT levy without affecting the company's bottomline. "We are debating options, particularly when it comes to superannuation benefits. But I am certain things can be worked out so that there is no negative impact on our bottomline," he said.

Mr Varma said that the Government should extend the last date by another month so that India Inc could get more time to understand the new rules.

Mr Ravi Sud, Vice-President (Finance), Hero Honda, said that the FBT would not pose a problem for Hero Honda as the company already follows a methodology by which expenses under various classifications can be captured. He added that the company had, in May-June, introduced a few new accounting heads to capture expenses more elaborately.

"There is a lot of problem of interpretation. There is still some ambiguity on what comes under the fringe benefit tax (FBT) and what should be considered as perquisites. The CBDT was supposed to come up with clarifications in the form of a circular by June end. No circular has come," according to Mr Ved Jain, Chairman, Direct Tax Committee, Assocham.

He said that banks are also not accepting FBT from companies that have come forward to pay their tax. "Banks are not accepting the tax since they do not know under which account head they should collect it. There have been no instructions to the branches from their head offices," Mr Jain said.

He said that Assocham has also written to the Government to extend the first deadline for FBT payment till August 31.

Mr N.H. Italia, President, Finance, ACC, said, "As far as advance payment of FBT is concerned, we are of course paying up, based upon the actual expenditure that has happened. It is still quite fluid, in the sense that you know the broad guidelines that have been announced but one still needs to work out the nitty-gritty part of it.... We are also waiting for the guidance notes from the Central Board of Direct Taxes and the Institute of Chartered Accountants of India on this."

Mr Y.M. Deosthalee, Chief Financial Officer and Director, Larsen & Toubro concurs. "Yes, of course, everybody has to calculate and pay FBT. For us, the financial impact is expected to be between Rs 20 crore and Rs 25 crore. But we are still working out the final details."

The Chief Financial Officer of Satyam Computer, Mr Vadlamani Srinivas, said, "We believe that the FBT is a retrograde step and should not have been implemented in the first place."

"Having said that, we feel heads like employer's contribution to an approved superannuation fund, provision of hospitality, travel expenses, sales promotion, including publicity, and such other heads, that do not directly benefit the employee should have been excluded from the ambit of the FBT," Mr Srinivas added.

(Inputs from New Delhi, Mumbai and Hyderabad)

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