FM refuses to relent on FBT, India Inc concedes defeat

After one and half years of hectic lobbying, industry chamber CII has realised that it''s easier to live with FBT rather than persuade the Finance minister to relent. CNBC-TV18 reports on India Inc''s wish list this time around.

Finance minister P Chidambaram is known to be one who doesn''t relent easily. Even though the industry has been lobbying hard for the last year and half to scrap the FBT, the FM hasn''t budged and as the budget making exercise kicks off, CII has decided to give up its battle to scrap FBT.

"I have conceded defeat on FBT. Now we would like the FM to just give an alternative in terms of choosing between higher corporate tax or FBT, " says CII president R Seshasayee and MD, Ashok Leyland.

If the government were to hike corporate tax rates, it would go up to 31 per cent. Besides FBT, a lot of corporate India''s long wish list mirrors its previous one. To encourage savings, CII wants the limit under 80C to be raised from Rs1 lakh to Rs2 lakh provided the additional Rs1 lakh savings is in infrastructure bonds.

On direct taxes, the industry body wants MAT to be abolished, distribution tax on dividend and stamp duty on mergers reduced and surcharge on income tax for domestic companies be removed.

On indirect taxes, the industry is okay with another cut in peak customs duty to 10 per cent. CII wants cenvat rate to be reduced to 14 per cent. While a broader service tax net is acceptable to the industry, a hike in service tax rates is not.

And finally CII wants the CST rate to be reduced to 2 per cent and a concrete roadmap for implementation of the much awaited GST to be announced and, like the previous year, disinvestments is on corporate India''s to do list for the government. But given the political realities, this wish may remain just that-wishful thinking.