Under pressure from Congress and United Progressive Alliance and criticism from the corporate world, Finance Minister P Chidambaram on Wednesday hinted at raising the limit on withdrawal of cash for tax and correcting the 'anomalies' in the Fringe Benefit Tax, but ruled out taking rolling back FTB totally.
"Now we have suggested a way in which black money can be tracked. Let's see if there can be some other way. If a better tracking system can be found without hurting people psychologically, we will find another way," he said in a public interaction at the Federation of Indian Chambers of Commerce and Industry function and later in an interview to NDTV.
Maintaining that the tax was not a revenue generation measure but aimed at keeping a trail on black money, the finance minister said there has been a request from the Congress Parliamentary Party and the UPA.
"I am thinking of putting a different cap on cash withdrawal."
"We are concerned about huge withdrawals of cash from banks every day. Such transactions, which distort economic level playing field, will have to be addressed. If it cannot be addressed this way, it will have to be addressed in another way," the finance minister said.
Replying to widespread criticism of the FBT, Chidambaram said legitimate business expenses would not be taxed. Fringe benefits were those given to employees collectively as a reward for their employment, he said.
"It must be understood in relation to employment and not in relation to business. The thrust of the section is very clear. There is no reason to misunderstand. Perhaps there are two or three items that are loosely worded. We can look at them.
"The Fringe Benefit Tax will stay. We are looking at two or three elements in FBT, pointed out to me, as causing some kind of anomaly. We shall look into them and remove anomaly, if any," he said.
"There is no intention to tax legitimate business expenditure. I have asked my people to look at the entries to see if any unintended anomaly has crept in that needs to be addressed," he said.
"We must wait for the final shape of the Finance Bill to emerge," Chidambaram added.
He said that the Union Budget for 2005-06 has attempted most ambitious direct and indirect tax reforms.
"The excise duties have been lowered and they must converge around CENVAT rates," Chidambaram said.
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