Fringe benefit tax rules to be simplified: FM

RUN UP TO BUDGET 2006

Finance Minister P Chidambaram today indicated that there could be some simplification of the fringe benefit tax rules in the Budget.

"If there are any glitches in the manner of tax administration, I have always said the matter can be revisited. Some simplification can be expected in the Budget," Chidambaram told newspersons during an interaction organised by the Forum of Financial Writers.

Industry has been demanding simplification of fringe benefit tax rules on the grounds that even genuine business expenses were getting taxed.

During their pre-Budget meeting with the finance minister on Monday, industrialists had made a strong case for such a simplification. Industry chambers like Assocham have even demanded that the government raise the corporation tax rate and do away with the tax on perks.

The minister also said the government was working on disinvestment of its stake in some non-navratna public sector companies.

The finance ministry has identified around a dozen PSUs for selling small stakes through public offers.

The list includes Power Finance Corporation, Neyveli Lignite, National Mineral Development Corporation, Indian Railway Finance Corporation and Bharat Sanchar Nigam Ltd. The issue is expected to come up for discussion during the UPA-Left co-ordination committee meeting on Thursday.

The finance minister said the Centre was on course to achieve the fiscal deficit target of 4.3 per cent of the gross domestic product and the revenue deficit target of 2.7 per cent of the GDP fixed in the Budget.

The government closed the last fiscal with a fiscal deficit of 4.1 per cent, which was better than the revised estimate of 4.5 per cent. Earlier this year, finance ministry officials had said that the government would strive to keep the fiscal deficit at 4.1 per cent of the GDP during 2005-06 as well.

Asked about the GDP growth target for the next fiscal, Chidambaram did not set any clear targets but said, "Growth is a function of many things. If we can boost investment, then growth will be better than 2005-06."

He added that the international crude oil prices, natural calamities and the world output growth were the imponderables. "If oil prices moderate and the world output stays around 4 per cent, then growth should be higher," the minister said.

The minister also said that tax compliance had increased and the revenue department had more information than before. Chidambaram said around 1-1.2 million new tax payers had filed returns for 2004-05.