BS.com visitors to FM: Scrap FBT

It is an overwhelming vote in favour of Finance Minister P Chidambaram scrapping Fringe Benefit Tax (FBT) and cutting back on the banking cash transaction tax (BCCT).

An online poll on the question - Should Finance Minister P Chidambaram scrap perks tax in the upcoming Union Budget 2006? - on 15 February - saw an overwhelming 62% vote for withdrawing the levy.

A similar sentiment is being echoed in the on-going Tell The FM series on the website now.

Saurab, in his online posting, said: "FBT should be eliminated, and a lot of things are expected." Sunder said: "Remove FBT and cash withdrawal tax." Atulya commented: "Hope the FM will do away with FBT and BCCT this time. The taxes were like penalties on our money."

Vipul J. Ashara has also asked the FM to exempt FBT on non-corporates since it consumes a lot of man-hours and machinery to get just very little revenue. 

Rao Diddigi wants the FM to clarify whether post offices can also collect banking cash transaction tax. "Post offices are also contemplating to collect banking cash transactions tax. I think this is contrary to the provisions of law. Our understanding was it does not apply to post office payments. Please clarify the matter to avoid ambiguity." 

So, there... can we expect action on FBT/BCCT?

A number of citizens are also expecting the FM to provide tax breaks for small car owners on the lines provided for home loans. P Dwarakanathan, in his posting, said: "Please consider tax exemption for car loans taken by
individuals similar to housing loans. Hope you will consider my suggestion." A view also echoed by Saravanan Shanmugam.

The other major expectations relate to holding period for overseas securities and long-term savings like provident funds.

Pruthul S Patel says: "Shares/securities are long-term assets if held for at least 12 months. Now that the RBI has liberalised investment in overseas securities,  the same holding period should apply to foreign securities to make international diversification meaningful and grow the capital markets."

A view seconded by Rohit K Shah who says that a holding period of 36 months for foreign securities to qualify as long-term assets is too long in the global arena. "Please reduce the period to 12 months to bring it on par with Indian securities and global standards. You may tax gains at a concessional rate. The RBI policy needs to be backed by fiscal policy."

D.Ramachandra Rao writes: "Please don`t apply the exempt-exempt-tax (EET) for public provident fund (PPF) accounts. Alternatively, please spare the PPF accounts already opened. In other words, even fresh deposits in old accounts should be spared. In case you don`t agree to this also, please allow PPF depositers to withdraw their funds  prematurely without penalty."

He goes on to add: "The EEE regime for PPF should continue. Otherwise, the contributors will suffer with tax on maturity, and also depreciated value of the money saved due to inflation. Having removed the bonus from the Post Office Monthly Income Scheme (POMIS), the finance minister should have removed the ceiling of Rs 3 lakh."

Shanmugam has expressed hope that an independent regulatory authority with more autonomy for ports would be announced in the budget. "More investment on primary and high school education. Make sure the state governments adhere to strict timeline in implementing projects. Otherwise, make sure they don't get the funds," he added.

Susanta Bhattacharya had a different concern - how to provide tax relief to government employees. "How to provide relief to govt. employees from tax burden since the tax is deducted from source? So, no malpractice they can do. Big businessmen do malpractice in paying tax to the government. Catch them and India will automatically shine," Bhattacharya said.

A similar view - but from a different angle - has been expressed by T.K.Padmanabhan: consider the time put in to earn the income. He writes, "The tax incidence should also consider the time one puts in to earn the income. An employee earning Rs 4 lakh in government service and a company employee working for almost double the time to earn the same income should not be taxed at the same rate."

Pramod Ahuja, writing in from London, has asked the FM to liberalise FDI in the banking, retail and all other sectors that are currently restricted or partially restricted. "Please re-commence the privatisation initiative as it seems to have come to a grinding halt. India is the talk of the town here in London. Please continue to ensure that it remains so by moving forward on the reform agenda," Pramod added.

Rajinder Kumar has a very specific demand - bring down customs duty on computerised embroidery machines. "CVD at 16% should be abolished. There is no CVD on sewing machines. If we want to take advantage of the quota-free regime in garments and textiles, garment and textile machinery should be less taxed," Rajinder added.

Jeyasuresh Sundaram also makes a specific request - "Could you please arrange to eliminate service tax on hoteliers and/or food items?"

Pramod Gupta presents a grim view of the taxation policies when he writes: "Your tax policies are lop-sided . They tax the common man while richie-rich are paying very low tax rate. For e.g, the cash tax rate for top 100 corporates works out to be just 20% while it is surely more for a common man. Over that, richie-rich who get crores of dividend don't pay any tax on it."  

Akash has demanded the scraping of 10% import duty on petrol and diesel, and Anil has asked the FM to make excise duty and service tax at par (say 12% within two-three years). "Reduce peak import duty, scrap import duty on diesel and petrol and cut down the excise for small cars," he added.

Hari G wants the FM to increase the IT exemption for conveyance expenditure. "A realistic and pragmatic approach is needed for employees using four wheelers in state capitals. Exempt conveyance expenses up to Rs 3,000 per month in view of the increasing price of fuel and transportation problems," Hari said.

Keep writing in with your comments and suggestions.

Business Standard will try and ensure that the FM and his team has a final dekko before the B-Day - February 28, 2006!