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Should Fringe Benefit Tax be scrapped?

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February 22, 2007 15:41 IST
The Confederation of Indian Industry in its budget wish-list has urged to finance minister to scrap the fringe benefit tax.
FBT was introduced by the Finance Minister P Chidambaram to tax expenditure of the companies on perks provided to employees.

Any benefits -- or perks -- that employees (current or past) get as a result of their employment are to be taxed, but in this case in the hands of the employer. This includes employee compensation other than the wages, tips, health insurance, life insurance and pension plans.

Corporates say the tax is levied on amounts that are not incomes and are in the nature of expenditure. Besides this, FBT is levied without considering the number of employees in an organisation, so even a firm with only 2 or 3 employees end up paying FBT.

The CII has said that FBT should be abolished or the choice should be given to the tax paying firms to pay 1 per cent additional corporate tax on its total income instead of FBT. 

What are your views on fringe benefit tax? Do you think FBT should be withdrawn?

Do you think it is a burden on corporates? Tell us your views.