The Hindu : Business : `Continuation of FBT to hit competitiveness'

Online edition of India's National Newspaper
Wednesday, May 04, 2005

Business

Business

`Continuation of FBT to hit competitiveness'

Special Correspondent

NEW DELHI: Industry has warned that continuing the proposed fringe benefit tax (FBT) would adversely affect competitiveness of the corporate sector but has welcomed dilution of its provisions announced by the Union Finance Minister, P. Chidambaram, in Parliament on Monday.

Leading chambers like the Federation of Indian Chambers of Commerce and Industry (FICCI) felt that the continuation of FBT in certain cases needed to be reviewed.

In fact, it has urged the Government to reconsider this step and withdraw the FBT tax altogether. "India is moving towards ASEAN levels for customs and other taxes and this could be a good benchmark. No ASEAN country has the concept of fringe benefit tax in its tax laws and we should follow the same practice,'' says the FICCI President, Onkar Singh Kanwar, in a statement.

The Confederation of Indian Industry (CII) was also disappointed over the fact that the FBT would stay. The President, Sunil Kant Munjal, said the industry body was of the view that the FBT was presumptive in nature. It was a tax on expenditure and could lead to disputes and litigations. Ideally, he said CII would like to see the proposal withdrawn.

The President of the Associated Chambers of Commerce and Industry (Assocham), M. K. Sanghi, felt that industry would have benefited if the floor for levy of withdrawal tax had been at least Rs. 2 lakhs.

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