Govt's cash withdrawal & FBT tax to stay

The government today asserted that the proposed tax on cash withdrawal and fringe benefit tax would not be rolled back, but hinted at certain modifications in them.

"Tax on cash withdrawal will not be withdrawn as the finance minister has already stated. We will, however, be willing to look at the limits," Revenue Secretary K M Chandrasekhar said during an interactive session at PDDCCI.

Later while talking to mediapersons, Chandrasekhar added that Chidambaram has already cleared his position on FBT that it will not be withdrawn.

However, if any particular item clubbed under fringe benefit is causing any difficulty to the industry, it can be looked at, Chandrasekhar said, adding that payment for advertisment is not part of fringe benefits.

The budget has proposed a 0.1% levy on Rs 10,000 withdrawal from banks on a single day and tax on employer for fringe benefits enjoyed collectively by the employees.

Chandrasekhar reiterated that cash withdrawal tax is not a revenue earning measure but a move to establish an audit trail to unearth black money.

"If tax is paid monthly, informaton on money transaction in banks will come to the government monthly and it will be too late for it to establish an audit trail," Chandrasekhar said on the proposed tax on cash withdrawal.

Justifying FBT, Chandrasekhar said there is imbedded element in perquisites and other benefits of companies, adding, this cannot be taxed in the hands of employees.