No reversal of FBT: official

Govt open to suggestions by the corporate sector in implementing it

The fringe benefit tax (FBT) introduced in the Union Budget 2005-06 cannot be reversed and the tax payers will have to live with it, said J K Rao, chief commissioner of income tax, Bangalore.

"There is no going back on the tax proposal. What the government can do now is to set right the anomalies in the system," he said.

He was inaugurating a conference on 'Fringe Benefit Tax "" Rules and Implications', organised by Assocham and Bangalore Chamber of Commerce and Industry (BCIC) here on Wednesday.

He said that the government is open to any suggestions by the corporate sector in implementing the new tax proposal with minimum changes.

"The tax proposal as it is cannot be dropped at this stage and the government may at best consider giving certain relaxations without altering the original intention of introducing the tax," Rao said.

The corporate sector, instead of asking for major changes in the new tax system, should give a thought to the larger aspect of tax mobilisation, he said.

"The well-to-do section of the society, which normally earns higher income should contribute to the national kitty by way of FBT," he stated. The Income Tax department has come out with a new circular with answers to about 107 queries raised by the tax payers that gives a detailed information to various objections, he said.

Making a presentation on FBT Circular, K R Sekar, partner, Deloitte Haskins & Sells said the new tax system is full of anomalies and it needs to be corrected.

Stating that the new tax system is going to stay for now, he said the finance ministry should make certain amendments to make it acceptable among all the stakeholders.

There should be tax for only the genuine expenditure. It is not appropriate to impose tax on employees' travel, expenditure incurred for treatment of injuries suffered in the course of performance of duties and treated at a general hospital.

"If such expenditure is taxed then no employer will come forward to bear the expenses of his employee at the time of medical emergencies," he said.

He said it is not appropriate to levy tax on all expenditure incurred for the purpose of sales promotion and publicity of a company's product. When an employee does not get any benefit while carrying out his company's duties such as going on tour for sales promotion, among others, he should not be taxed, he stated.

The government should relook at these anomalies and make changes in the FBT so as to make it appealing to all the concerned, he added.