Nix FBT, demands industry

RUN UP TO BUDGET 2006

Also on demand list: Cut in Customs duty, tax breaks on investments in infrastructure.

Industry today was unanimous in seeking withdrawal of fringe benefit tax (FBT) in the forthcoming Budget. The demand was raised at a pre-Budget meeting of select industrialists with Finance Minister P Chidambaram.

While Ficci said only genuine expenses should be taxed, Assocham said the government could alternatively consider increasing the corporate tax rate by 1-2 per cent.

"At least, the FBT should be modified and its compliance be made easier," said one of the participants.

The finance minister, on his part, asked industrialists to make specific suggestions on the FBT. A ministry official told Business Standard later that no specific suggestion was made.

Industry also sought a reduction in Customs duty to the Asean levels of 8-10 per cent.

Another common demand was that the government should re-visit its decision to reduce depreciation rates and restore the earlier rate of 25 per cent.

Sectors which focus on research, particularly the pharmaceutical sector, said, the government should increase the weighted deduction allowed under the Income Tax Act from 150 per cent to 200 per cent.

The pharma sector also said the increased weighted deduction should be allowed for 10 years up to 2017. The current concession expires in March 2007.

The pharma sector and Nasscom also demanded that disbursements from the National Technology Fund should be made annual and be extended to cover biotechnology and all kinds of research.

A demand was made to increase the scope of research and development to include clinical trials and regulatory filing by pharma companies.

Another demand was to grant tax breaks on investments in infrastructure.

On telecom, a participant said it was one of the most taxed sectors and needed some relief.

Confederation of Indian Industry (CII) President Yogi Deveshwar, however, said a balance has to be struck between the government's revenue needs and industry's wishes. "Industry never wants taxes, but we cannot have zero tax," he said.