The time limit for service of scrutiny notices for fringe benefit tax (FBT) assessments is proposed to be rationalised.

The Income-Tax Department will have to serve scrutiny notice within six months from the end of the financial year in which the FBT return is filed, according to the amendment proposed in the Finance Bill 2008, which was passed by Parliament recently. The proposed amendment would be applicable from the financial year 2007-08 onwards.

Hitherto, the scrutiny notice was required to be served on the assessee within 12 months from the end of the month in which the return was filed. Tax experts say that the proposed amendment was a department friendly move.

The Government has also decided to impose withholding tax obligations on contractual payments on an Association of Persons and Body of Individuals with effect from June 1. This forms part of the amendments moved by the Finance Minister, Mr P. Chidambaram, to the Finance Bill.