It’ll rain fringe taxes for FM this week

Font Size

Print

Feedback

Email

Discuss

Mumbai, July 10: The debate on fringe benefit tax (FBT) will crop up all over again as companies line up to file their first installment due on July 15. However, finance minister P Chidambaram must be pleased with his Budget announcement following the FBT payment of Rs 30 lakh by Varun Shipping for the first quarter earlier this week.

Shipping Corporation of India (SCI) is likely to file FBT of around Rs 1 crore and annually it could be around Rs 4 crore, a top SCI official said. The amount in Varun Shipping’s case — on an annualised basis it works out in excess of Rs 1 crore — invariably gives some insight about the amount the government could raise from this tax avenue, with many companies set to disclose these figures in the coming week.

While introducing the FBT in the Union Budget, the FM then stated, "Many perquisites are disguised as fringe benefits, and escape tax. Neither the employer nor the employee pays any tax on these benefits, which are certainly of considerable material value."

India Inc had then protested the 33% tax on fringe benefits availed by the employee saying that it was a tax on an expenditure and not on income. According to GE Shipping general manager (planning) Rajat Dutta, "Like in the case of a company with a large field force, travelling of the sales force is very high.

Similarly in a shipping company, as the shipping assets are floating all over the world, travelling in case of crew and officers to the ship while joining and signing off, attracts fringe benefit of 20% on which a tax of around 33% is payable."

SCI director SS Rangnekar concurs, "Official travelling is part of business and not for pleasure." Infotech companies will see the impact of the FBT as the companies’ business calls for frequent travel of employees. Companies said that the amount to be paid under FBT was under compilation.