Majority of corporate honchos want the Finance Minister to abolish Fringe Benefit Tax (FBT) on normal business expenses such as sales promotion, travel and gifts to customers in his forthcoming budget proposals, industry chamber Assocham survey has said.
Of over 400 CEOs and MDs of premier industrial sectors, 80 per cent are of the view that the tax should not exist as these expenses do not have any element of disguised perquisites to employees, the survey said.
They are of view that gifts to customers is a common practice and employees do not derive any benefit, it said adding that it, therefore, no longer makes an economic sense to continue to subject employers to FBT on such expenses.
The distribution of gifts is prevalent in industries like garment, white goods, FMCG, small accessories and automobile, whose margins are reeling under pressure due to rupee appreciation, and removal of FBT on sales promotion expenses would provide them a great relief, it said.
"Likewise, subjecting FBT on dealer meetings conducted by various business promoters to discuss business strategies should also not be subjected to FBT," said Assocham President Venugopal Dhoot.
Besides, 55 per cent of respondents said surcharge on Corporate Tax, which is 2.5 per cent currently, should be abolished and 30 per cent Corporate Tax rate imposition should continue.
At the same time, 60 per cent are of opinion that their annual turnover could be taxed to the extent of 1 per cent, provided FBT is abolished on identified and suggested expenses and money generated out of it be used for irrigation purposes.
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