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Thursday , February 28, 2008 at 0021 hrs to the various budget provisions. Since many Indian business houses have a global footprint, they take advice from external consultants to analyse the larger implications to take appropriate action. The budget provisions, however, do not have any immediate impact on the product line of the company as starting up a new project is a long term-strategy. “However, if any special provisions are announced to encourage new business opportunities or if tax incentives are offered—like the one for setting up Special Economic Zones—then corporates swing into action immediately and draw up the blueprint for foraying into new business,” says a financial consultant.

Taxes still remain the most important part of the budget for companies and any change is tax structures post-budget means a host of calibrations in the accounting process and often companies have to deploy additional human resources. Subhash Goyal, chairman, STIC Travel Group, says the government’s introduction of Fringe Benefit Tax (FBT) in the 2005-06 budget was of big concern for most companies in the country as it required extensive and complicated documentation process and companies had to deploy extra manpower to track the various heads of expenses that attract FBT. Goyal further adds that the government should maintain continuity in the tax structure for a longer period to enable business to grow.

In fact, the FBT imposed two years back has been a source of dissatisfaction between the industry and the government. Even last year before the budget various industry associations had requested the government for a reduction or removal of FBT, but the finance minister did not make many changes in the structure. The FBT was imposed with the intention of taxing the perquisites provided by an employer to his employees, in addition to the cash salary or wages paid and certain expenditures of companies like the ones on sales promotion and business travel. Though the industry had objections to FBT, it was a high revenue earner for the government. The government collected revenue worth Rs 5,121 crore from April 2007 to January 15, 2008, as against a total collection of Rs 3,108 crore during the corresponding period of 2006-2007.