Perks tax to stay on superannuation

RUN UP TO BUDGET 2006

Finance ministry is re-examining some other FBT provisions.

The coming Budget is unlikely to remove superannuation from the purview of fringe benefit tax. But the finance ministry is re-examining some other FBT provisions, like those pertaining to sales promotion, entertainment and distribution of free medical samples.

Government officials said superannuation were not likely to be touched as an expert committee on taxation of long-term savings recommended that exempt, exempt tax (EET) be not included in this year's Budget.

"There is a view that the EET committee report needs wider public debate before any action on it recommendations is initiated by the ministry," an official said.

Officials also said simplification of the FBT would be marginal as there were concerns that too much tinkering with the tax could cause revenue loss.

The government has so far mopped up only around Rs 1,700 crore by way of the FBT till December. There are expectations that the mop-up can be in the range of Rs 3,500-4,000 crore in this fiscal year.

Finance Minister P Chidambaram has already indicated that the FBT will be simplified in the Budget.

The corporate sector has been lobbying for withdrawal of genuine business expenditure from the purview of the FBT.