FBT to stay

By Vijay Kumar

Now it is confirmed that the Fringe Benefit Tax is here to stay in spite of strong opposition from India Inc. The FM is not known for changing his views easily and all the efforts of the industry leaders obviously failed with the FM only agreeing to simplify the procedure. Corporates have been complaining that the compliance cost of FBT was quite high and some of the taxable items were genuine business expenditure. The FM is expected to net a cool 4000 Crores in this financial year from FBT. Corporate leaders had suggested a hike in corporation tax instead of the FBT but the FM says taxing perquisites is a universal practice, as it ensures both vertical and horizontal equity. But there seems to be another benefit not exactly fringe for the government. Once the corporates start reducing benefits to the employees and giving them more salaries instead of perks, the higher salaries will become taxable and the Government’s income tax is sure to go up. We really have a financial wizard up there as Finance Minister.