Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: empanelment :: form 3cd :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: VAT RATES :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: ACCOUNTING STANDARDS :: cpt
General »
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA
 Impact of GST on Real Estate Sector
 GST regime: Tax payers allowed to take option of third-party interfaces

Simple, sensible norms to tax perks
July, 11th 2009

When a tax contributes just about 2.3% to the direct tax kitty, it makes little sense to continue with it, particularly if the cost of compliance is high. In that context, the decision to abolish the fringe benefit tax (FBT) is welcome.

India Inc should also be happy the government did not take up the second part of its suggestion, i.e., raise the corporate tax rate by a couple of percentage points to make up for the revenue loss. However, the decision to replace FBT with a tax on perquisites would no doubt raise the tax liability of the salaried class. And perhaps even complicate their tax calculation.

The onus is on the Central Board of Direct Taxes to write out the notification for taxing perks that is simple to understand and leaves little room for misinterpretation, while ensuring the objectives for which the FBT was introduced are also met.

Readers may recall former FM P Chidambaram had introduced the impost to comprehensively tax all the fringe benefits provided by companies to employees, particularly those at the senior level, over and above their salaries. He had set the tax rate at 30% for a list of perks.

Many suspected the exercise was meant to be only a revenue generating measure, although Mr Chidambaram had argued, vociferously, that it was meant to ensure greater vertical and horizontal equity. For instance, a person who received his entire income in cash bore a higher tax burden than a person who got part of his salary as fringe benefits.

Also, it was mostly the senior executives who enjoyed the benefits, but paid disproportionately lower taxes as compared to those who were not provided such benefits.

If the measure was indeed aimed at generating revenues, collection of Rs 8,000 crore last fiscal and Rs 7,100 crore in 2007-08 does not fully justify the effort companies had to put into calculating their liability. Yet the objective sought to be achieved by FBT is excellent.

Peoples tax liability should be directly proportional to their incomes, received both in cash and kind. We hope the proposed perks tax notification is comprehensive, the method for valuation clearly defined and sensible, and individuals are not overtaxed.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Contact Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions