The Confederation of Indian Industries (CII) has sought the scrapping of fringe benefit tax in its pre-Budget memorandum.
The chamber has suggested that alternately, firms that are already paying taxes should be given an option to pay additional 1% corporate tax and be exempt from the FBT.
According to CII, this will cut down on the complications and hassles that paying FBT presently involves. FBT is particularly affecting the fast growing knowledge-based sectors such as software, IT-enabled services, pharmaceuticals, travel and hotel.
The scope of items covered under FBT is unduly large with several categories of business expenditures for which no benefit accrues to the employees.
Expenses like travelling, hotel boarding, sales promotion, conference expenses are genuine expenditures and taxing them only affects the competitiveness in global market. The complex process relating to filing of return in respect of FBT further adds to the cost.
Besides direct taxes, corporates at present are also required to pay various cess (2% education cess, for instance) and surcharges, which are administratively cumbersome and heavily increase the cost. CII has called for one rate of corporate tax rather than many cess and surcharge.
So thats what CII feels about fringe benefit tax, but as a chartered accountants do we have a different view on this?
GAGAN BUTTAN
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This is a nice forum of my interest. I guess CA in India is similar to CPA of UK.
I am looking for few CPA who can conduct project analysis and sales audit. We are a management consultancy firm in UK. We never outsource to India.
Since I found the admin and other people are well qualified, our company can think of outsourcing services from India too.
Regards
Mark