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I’d end the unjustified fringe benefit tax

I’d end the unjustified fringe benefit tax
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First Published: Tue, Feb 19 2008. 12 43 AM IST

Saurabh Srivastava. (Sanjay Sharma / Mint)
Saurabh Srivastava. (Sanjay Sharma / Mint)
Updated: Tue, Feb 19 2008. 12 43 AM IST
What are the three things you wish for from the Budget?
Saurabh Srivastava. (Sanjay Sharma / Mint)
An extension of the STPI (Software Technology Parks of India) scheme, which helped create the software industry in India and which would put the vast majority of IT/ITeS (information technology and information technology-enabled services) companies…, which are SMEs (small and medium enterprises), at par with the big players who have been given the benefit of SEZs (special economic zones).
Incentives for institutions and individuals to invest in early-stage venture capital funds in order to encourage innovation and entrepreneurship in India.
This includes the restoring of unrestricted pass through.
If you could end one thing, what would that be?
It would be the perfidious, retrograde and completely unjustified fringe benefit tax (FBT), which in fact does not tax fringe benefits but expenditure and hurts SMEs the most.
What would be the one thing outside your industry you would want in the Budget?
Freeing up of higher education to the private sector and educational institutions around the world. Our current “dog in the manger” policy results in the government neither making sufficient investment in this area..., nor allowing private-sector overseas players to do so. The result is that Indian parents spend an estimated $10 billion (Rs39,700 crore) to send their kids abroad for higher studies as they couldn’t get into decent institutions in India.
What is the one thing you don’t want changed?
The belated focus on infrastructure and primary education.
Which budget disappointed you the most? Why?
Last year’s budget. The economy was buoyant, tax collections had been unprecedented and so the finance minister had phenomenal room in which to create a visionary, forward-looking budget, but in the end only did some tinkering and introduced totally unnecessary changes that proved disastrous for India’s crown jewel—the knowledge industries as also the venture funds that invest in innovation.
One proposal you think is shot down in every budget but shouldn’t be.
There are three proposals that have come up in every budget and are shot down but shouldn’t be because they would have an extremely positive impact on the economy:
1. Lowering of personal and corporate income-tax rates. The extremely buoyant tax collections are a tribute to what lower income-tax rates can do.
2. FBT: this is an unfair tax, creates unnecessary opportunities for corruption at lower levels, and really must go.
3. The extension of the STPI scheme.
What would you consider to be inclusive growth?
Inclusive growth for me is not stop-gap, one-off measures that dole out some freebies to the weaker sections of society for election purposes, nor is it quotas in IITs (the Indian Institutes of Technology). If we are serious about inclusive growth, the kind of measures we should look at include:
1. Vouchers to children from underprivileged sections for free education in a school of their choice rather than forcing them into government schools.
2. Ensuring the quality of teachers and facilities at government-run primary schools.
3. Vastly enhance the number of scholarships for children from weaker sections to pursue higher studies at premier institutions.
4. Urban-level infrastructure in villages including connectivity by road and rail that would allow livelihoods to be created for the rural poor rather than have them come and over strain the already weak urban infrastructure.
5. Significantly encourage creation of microcredit, leading to creation of micro-enterprises and entrepreneurs among the weaker sections.
(Saurabh Srivastava is chairman emeritus, Nasscom, co-founder, Indian Angel Network, and chairman, Indian Venture Capital Association).
By Regina Anthony
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First Published: Tue, Feb 19 2008. 12 43 AM IST