The government on Friday asserted that the proposed tax on cash withdrawal and Fringe Benefit Tax would not be rolled back but hinted at certain modifications in them.
"Tax on cash withdrawal will not be withdrawn as the finance minister has already stated. We will, however, be willing to look at the limits," Revenue Secretary K M Chandrasekhar said during an interactive session at PHDCCI in New Delhi.
Later while talking to mediapersons, he added that Chidambaram has already cleared his position on FBT that it will not be withdrawn.
However, if any particular item clubbed under fringe benefit is causing any difficulty to the industry, it can be looked at, he said, adding that payment for advertisement is not part of fringe benefits.
The Budget has proposed a 0.1 per cent levy on Rs 10,000 withdrawal from banks on a single day and tax on employer for fringe benefits enjoyed collectively by the employees.
Chandrasekhar reiterated that cash withdrawal tax is not a revenue earning measure but a move to establish an audit trail to unearth black money.
"If tax is paid monthly, informaton on money transaction in banks will come to the government monthly and it will be too late for it to establish an audit trail," he said on the proposed tax on cash withdrawal.
Justifying FBT, Chandrasekhar said there is imbedded element in perquisites and other benefits of companies. This cannot be taxed in the hands of employees, he added.
Chandrasekhar sought to allay fears of the industry on FBT by stating that Finance Bill has not been passed yet and there will be lot of discussion in Parliament as well as with the corporate world before it is implemented.
Describing the Budget as the growth-oriented one, he said the government has to earn revenues to meet its expenditure on social development and infrastructure.
"We cannot live beyond our means. Otherwise gap increases between revenue and expenditure. The Budget has to be seen in this context," the revenue secretary said.
He said the Budget tried to correct as much inversion in the duty structure as possible in a range of items, including metals, food processing and R&D.
"Our efforts all through was to make Budget as much industry-friendly as possible, keeping in view our constraints with regard to expenditure on social development and infrastructure," he said.
Later, revenue department officials explained the rationale of coming out with a notification on service tax on Thursday, saying that exports of services will not be taxed while there will be tax on the imports of services.
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