Fringe benefit tax (FBT) was introduced as a revenue raising measure. FBT can be justified on the principles of horizontal equity and vertical equity.
Nevertheless, I have reviewed it with an open mind. I have also taken on board the views expressed by the apex chambers of commerce. I propose to make the following changes in chapter XII-H of the Income Tax Act:
Under Section 80C, there is already an exemption up to Rs 1,00,000 for contribution by an employee to an approved superannuation fund.
Honourable Members will note that, under these two provisions, there can now be a tax-exempt contribution up to Rs 2,00,000 per year for the benefit of an employee.
This allowance, I believe, is generous enough in the case of an overwhelming majority of employees.