FM to finetune language of fringe benefit tax

NEW DELHI: The Finance Ministry will finetune the language of the proposed fringe benefit tax (FBT) in consultation with a group of industry representatives.

Speaking at a gathering of CII national council members in the Capital on Friday, finance minister P Chidambaram said that CII, Assocham and Ficci could send one or two members each who would sit with ministry officials to improve the language of the FBT.

He, however, reiterated that the tax will stay and added that the government will address the concerns raised over the cash withdrawal issue.

“The department will work with you and look at improving the language of the chapter on the fringe benefit tax,� the minister said. The FM pointed towards the surging sensex more than once while addressing the captains of the industry, in what was a post-mortem of the Budget with the who’s who of India Inc.

He said the goal of the government is one of a ‘firm reform-oriented growth path’. Giving his view on the taxation structure, the FM said the tax base will expand if tax rates are brought down. “Tax administration must also improve to make it non-interactive, automatic and computer-assisted. I believe that the tax base will improve this year,� he said.

Mr Chidambaram said the government will come out with a new income tax law in the coming fiscal.

“I will introduce a new Income Tax Bill before the end of the next fiscal. A number of provisions and exemptions need to be cleaned up,� he said, without disclosing details on the proposed Bill. He also clarified his stand on taxation of the agricultural sector, which has been demanded by the industry chambers. “The Constitution does not allow taxation of agricultural income and so we cannot tax it,� the FM said.

Mr Chidambaram said the special purpose vehicle (SPV) for the infrastructure sector will be set up in 4-6 weeks, which will fund private and public sector projects, including joint ventures involving the two. The SPV will be a shell company to raise rupee resources for long-term funding.

Replying to questions related to customs duty, the FM said that most cases of inverted duty structure have been corrected.

“There are some remaining, which are due to the free trade agreement which are difficult to address, but we are trying to look at them. We have not received any representation after the Budget on any other cases of inverted duty structures, but there may be some which we intend to clean up this year to the extent possible,� he said.

The FM also asked the industry to set up an online mechanism wherein the 80,000 excise duty assesses — who account for 90% of total excise collection — will present statistics of what they are producing in their factories, along with excise liabilities daily or weekly with the government for quicker assessment. He, however, clarified that the industry need not pay the excise duty on a daily basis and could continue with monthly payments.

Replying to a question related to specific measures for the pharma and biotech sectors, the FM said the government can consider specific plans if the department of chemicals and biotechnology forwards any concrete proposals in the regard.