India Inc votes against fringe benefit cess

India Inc has unanimously voted against the fringe benefit tax saying it fails to distinguish between routine business expenses and employee benefits.

India Inc has unanimously voted against the fringe benefit tax, saying it fails to distinguish between routine business expenses and employee benefits.

This was one of the key findings from the CEOs' snap poll conducted among the National Council Members of the Confederation of Indian Industry (CII) today.

The CEOs were, however, positive on the prospects for GDP growth despite Fiscal Responsibility and Budget Management (FRBM) Act goals being put on hold for the time being.

Among the respondents polled, 87 per cent were optimistic that the economy would record a growth of 6-7 per cent in 2005-06. Around 54 per cent of the respondents felt that fiscal targets would be met in spite of FRBM goals being put on hold.

On the issue of dividend distribution tax, 73 per cent of the CEOs felt that the increase in surcharge on this tax, from 2.5 per cent to 10 per cent, would negate the impact of corporate tax having been reduced to 30 per cent from 35 per cent.

The respondents were evenly divided on the issue of reduction in depreciation allowance, from 25 per cent to 15 per cent , and how it would impact the net outflow of taxes. When seen in the light of a drop in the corporate tax rate, 52 per cent felt there would be no additional outflow of tax.

Cash withdrawal tax elicited a strong response with 90 per cent stating that the proposed tax would not be effective in keeping a check on black money.

On the easing of the statutory liquidity and cash reserve ratios, the CEOs were confident that this would not only boost investments but would also bring down interest rates of the loans in the priority sector.as one of the key findings from the CEOs' snap poll conducted among the National Council Members of the Confederation of Indian Industry (CII) today.

The CEOs were, however, positive on the prospects for GDP growth despite Fiscal Responsibility and Budget Management (FRBM) Act goals being put on hold for the time being.

Among the respondents polled, 87 per cent were optimistic that the economy would record a growth of 6-7 per cent in 2005-06. Around 54 per cent of the respondents felt that fiscal targets would be met in spite of FRBM goals being put on hold.

On the issue of dividend distribution tax, 73 per cent of the CEOs felt that the increase in surcharge on this tax, from 2.5 per cent to 10 per cent, would negate the impact of corporate tax having been reduced to 30 per cent from 35 per cent.

The respondents were evenly divided on the issue of reduction in depreciation allowance, from 25 per cent to 15 per cent , and how it would impact the net outflow of taxes. When seen in the light of a drop in the corporate tax rate, 52 per cent felt there would be no additional outflow of tax.

Cash withdrawal tax elicited a strong response with 90 per cent stating that the proposed tax would not be effective in keeping a check on black money.

On the easing of the statutory liquidity and cash reserve ratios, the CEOs were confident that this would not only boost investments but would also bring down interest rates of the loans in the priority sector.