Budget 2007 to simplify FBT, rationalise taxes

Government may simplify fringe benefit tax, rationalise tax structure, and depreciation norms for R&D in the next budget, apart from making efforts to raise the tax-GDP ratio and garner more funds for development.

Addressing a FICCI conference on taxation, revenue secretary K M Chandrasekhar said: "Government was progressing towards non-intrusive tax regime and further simplification of procedures would be carried out to boost domestic and international trade."

Echoing finance minister P Chidambaram, he said the reluctant states must come on board and implement value added tax from next year, after which a nationwide information network has to be put in place.

Once the systems are in place, he said a discussion for a national VAT or good and services tax could be initiated with states. "A unified VAT will be beneficial to the country in the long run," he said.

On FBT, he said "The complexity is worrisome. We have tried to address it. We are open to further suggestions. We will certainly take this idea on board and do whatever we can do in the budget."

Though the depreciation norms for the industry in general has been rationalised as per Kelkar panel recommendations in the last budget, he said the norms for R&D may be revised after consultation with department of science and technology.

He invited industry's suggestions for carrying out changes in double taxation avoidance agreements with various countries to ensure that there is no cascading effect of taxes on India Inc.