India Inc has devised a plan to deal with the contentious Fringe Benefit Tax. Industry players are going to tell Finance Minister P Chidambaram to make this tax voluntary "" as opposed to compulsory "" for tax-paying companies. |
Instead of the FBT, the tax-paying companies were ready to pay 1 per cent more than their total tax liability, industry sources said. |
Sources said the Confederation of Indian Industry had ascertained the views of its members and the national council had endorsed the proposal. This suggestion is likely to be a part of the pre-Budget memorandum industry players will submit to the finance minister. |
The proposal is that tax-paying companies be given the option of paying either the FBT or 1 per cent more than their total tax. For the non-taxpaying companies, the FBT should continue as projected in the last Budget. |
This, industry experts feel, will address the finance ministry's grievances about corporate India's non-compliance with the tax regime and industry's complaints about the fresh red tape that the FBT allegedly represents. |
"The governnment tells us that 85 per cent of the companies in India file returns but evade tax by listing everything as expenses. So we are going to ask the finance minister to give tax-paying companies the option of sticking to the FBT or to paying 1 per cent more tax. For the non-taxpaying companies, the FBT should continue. Maybe this will induce more companies to come into the tax net," an industry source said. |
The Budget had envisaged increased revenue of around Rs 6,000 crore after the introduction of the FBT. |