Finance Ministry is likely to tone down some of the provisions of fringe benefit tax and moderate the conditionalities for banking cash transaction tax (BCTT) proposed in the Budget.The announcements are expected to be made by Finance Minister P Chidambaram during the passage of Finance Bill in Parliament, sources said.On BCTT, sources said the limit of Rs 10,000 may be extended to Rs 25,000-50,000. Savings account may be spared as most high-value transactions are in current accounts.Since the purpose of BCTT is not for generating revenue but leave a tax trail, the threshold limit is likely to be hiked in case of current accounts so that ordinary depositors are not harassed.At the same time, taxmen wants to keep a tab on large fund movements and for this purpose the mandatory quoting of pan may be extended to cash withdrawals beyond Rs 10,000 on a single day. Presently, pan is mandatory for bank transactions of Rs 50,000 and above.Tax experts said the objective of tax trail can be achieved through annual information return under section 285 ba of the act and asking account holders to quote pan.Further, all taxpayers may be required to give details of all their bank accounts in their return of income to have an effective trail of all bank transactions not only cash transactions.On FBT, sources said several anomalies were pointed out by industry bodies and a committee was set up under Parthasarathy Shome, advisor to Finance Minister. The panel is now giving finishing touches after taking inputs from various professional bodies. Sources said loss-making and small companies may be spared from FBT as most of them offers no significant fringe benefits to their employees.Further, relief may be considered for genuine charitable institutions who are not carrying on profitable business.While the Shome Committee is scrutinising what expenses could be treated as genuine business expenditure and what could be treated as fringe benefits, sources said sales promotion, travelling, advertising and publicity can not be treated as benefits to employees and therefore such expenses should be excluded from the purview of FBT as envisaged in section 115 wb(2).Moreover, medical facilities which are not considered as a perquisite in terms of the proviso to section 17(2) should not come under FBT, sources said.Government may also accept recommendations from industry and professional bodies and reduce the percentage of deemed fringe benefit.Tax experts have pointed out that fringe benefit should not exceed 10% of the expenditure for levy of the tax.
