labels: industry - general, union budget 2006
Still room for assessment of FBT, say corporatesnews
01 March 2006

In exclusive arrangement with CNBC

FBT has been at the centre of all debates since last year, while the FM has tweaked it slightly in order to end all debate. It seems, though, it remains an issue of endless debate.

Last year FBT was introduced at 30 per cent, this year a few changes have been announced in the computation of fringe benefit tax. Also, FBT on tour and travel has been reduced to 5 per cent from the earlier 20 per cent, while brand endorsement has been excluded fromit. In addition to this, the retirement contribution cap is at Rs100,000 for FBT.

Chidambaram believes that FBT is justified both on the grounds of horizontal and vertical equity.

N Santhanam, CFO, Nicholas Piramal Group, says, "To a great extent I am satisfied with the changes in FBT, given the fact that the FM cannot go back on what has been introduced last year. But my view is that he could have done something better on sales promotion at least for the pharmaceutical sector. Travel and tours was already 5 per cent and now the general industry has been brought into that 5 per cent today."

However, he adds that the benefit provided on pharma samples is good because the pharma industry thrives on samples and so to that extent there is a great relief.

Managing Partner at ELP, Rohan Shah believes that litigation is not necessary but routine assessment on FBT will take place.

He says, "I think as FBT goes through the process of scrutiny there will be situations of normal issues in assessment. The whole issue of whether people will challenge this is not certain. It will actually be a confluence of the two, wherein there will be assessment along with people who would want to sort of challenge the constitutionality or validity of something like this."

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Still room for assessment of FBT, say corporates