FBT likely to be retained: Shome

Fringe Benefit Tax (FBT) is unlikely to be withdrawn in the budget despite mounting pressure for withdrawal from apex industry chambers.

"I don't envisage that FBT will be removed. There is no such thinking in the finance ministry," Parthasarathy Shome, advisor to the finance minister, said today.

Changes suggested by various industry bodies and other quarters would be studied in the budget-making process, Shome added.

Leading industry chambers like CII and FICCI have demanded the removal of FBT levied in 2005 budget for the first time.

In its pre-budget memorandum, CII has proposed that the government should withdraw FBT and carry out other direct tax reforms to help the manufacturing sector grow at 12%and the economy at 8%.

CII has said that firms already paying taxes should be given an option to pay an additional 1% corporate tax and be exempted from FBT. "This way, firms can choose to avoid a number of hassles and complications involved with the discharge of FBT liabilities. More importantly, the government's objective of widening the corporate tax net will also be achieved," the memorandum said.