New Delhi, March 17
A SECTION of Corporate India on Thursday suggested that fringe benefit tax (FBT) be considered at the time of the introduction of the simplified Income Tax Bill. The FBT provisions are currently part of the Finance Bill 2005.
The Finance Minister, Mr P. Chidambaram, had already promised that the existing income - tax law would be re-written and a new Bill for this purpose would be introduced in Parliament by December 2005 or January next year.
The suggestion to have FBT provisions under the proposed simplified IT Bill was made to the Expert Committee, headed by Dr Parthasarathy Shome, Advisor to Finance Minister, here on Thursday. The expert committee has been appointed to examine the entire gamut of issues relating to the FBT provisions.
Besides Dr Shome, the FBT Committee had a representative each from the three apex chambers Assocham, FICCI and CII. The Chairman of the Fiscal Laws Committee of the Institute of Chartered Accountants of India (ICAI), Mr Ved Jain, is also a member of the committee. The FBT Committee, which met on Thursday for the first time, is understood to have had preliminary discussions on the modalities of FBT. A section of industry was of the view that since the simplification of the income-tax law was on the anvil, the provisions relating to FBT should be considered in a "wholistic" manner at that time.
It was contended that the present drafting of the FBT provisions would lead to a lot of interpretational issues and ultimately lead to vexatious litigation.
Informed sources said that there was also a suggestion on whether the FBT could be levied at the hands of the employees by expanding the scope of Rule 3 of the Income Tax Rules.
On its part, the ICAI has been taking the side of the revenue department and was of the view that no income should go untaxed. The institute had, however, held that the principle of equity could be incorporated in the FBT provisions.