New Delhi: Over 80% of CEOs and MDs have urged the finance minister to abolish Fringe Benefit Tax (FBT) on normal business expenses such as sales promotion, travel and gifts to customers in his forthcoming budget proposals for 2008-09 as they do not have any element of disguised perquisites to employees.
A random survey on Pre-Budget Preferences of corporates on FBT was carried out by Assocham, detailed responses from over 400 CEOs and MDs of premier industrial sectors.
* 80% felt it is common business practice to provide gifts to customers, and therefore, it no longer makes economic sense to continue to subject employers FBT on such expenses
* Distribution of gifts is prevalent in industries like garment, white goods, FMCG, small accessories and automobile, which currently are under pressures for margins and thus removal of FBT on sales promotion expenses would provide them greater relief
* 20% expressed that Finance Act of 2005 introduced FBT, subjecting corporates to this Tax and since the issue was taken up several times in the past for review, ut did not act on it and therefore there was no point repeating it now for it was unlikely that its abolition would reconsidered
*65% felt that instead of FBT which is a burden on most corporates, Finance Ministry should bring large farmers into tax net as they have been avoiding payment of taxes on agricultural income in the guise of agriculture. Agricultural income should be classified in a manner so that medium and marginalized farmers only escape taxation on agricultural income and large farmers are subjected to it
*55% aired their voice by collectively expressing that surcharge on Corporate Tax which is 2.5% currently should be abolished and 30% Corporate Tax rate imposition should continue
* 60% offered that their annual turnover could be taxed to the extent of 1% provided FBT is abolished on identified and suggested expenses and money generated out of it used for irrigation purposes.
*Majority expressed collective concern on rising crude oil prices and its impact on Indian economy advising that the burden of skyrocketing crude prices should be passed on to consumers and efforts should be initiated to phase out the era of subsidy in a gradual manner
* Most sought for reduction of subsidies that go into fertilizer and food sector, besides petroleum, arguing that the intended subsidies never reach the targeted lot and therefore the Finance Ministry should utilize stringent channels for disbursement of subsidies through establishing a sound monetary mechanism instead of taxing corporates on small and petty issues by taxation like FBT.
* Subjecting FBT on dealer meetings conducted by various business promoters to discuss business strategies should not be subjected to FBT - this was being taken up by the chamber with revenue officials of the finance ministry