the CEOs surveyed in the Associated Chambers of Commerce and Industry's Business Barometer survey were happy with the reduction of the corporate tax from 35 per cent to 30 per cent, while 57 per cent out of them were of the view that the gains from the corporate tax reduction will be nullified because of the cut in the depreciation rates.

Most of the CEOs surveyed said that the impact of the fringe benefit tax would be 'most severe' on Indian enterprises. They argued that advertisement and sales promotion expenses should not be included under fringe benefit tax.

The survey also pointed out that the cash withdrawal tax would be a big blow for small retailers and dealers.

However, 30 per cent of the respondents said that since the surcharge has also been increased from 2.5 per cent to 10 per cent, the overall benefit of the corporate tax reduction was only around three per cent.

Some software firms feel that a wide variety of payments would come under the ambit of fringe benefit tax. A recent survey also said that because of the impact of the fringe benefit tax, companies across sectors are likely to cut down on the increments that employees would get.

Answered by Om Prakash , an ibibo Master, at 7:38 PM on September 25, 2008

Well Shayam! India Inc is quite nervous about the proposed fringe benefit tax and feels that the gains from the reduction in corporate tax announced in the last Budget would be nullified by the cut in depreciation rates.

Nearly 70 per cent of the CEOs surveyed in the Associated Chambers of Commerce and Industry's Business Barometer survey were happy with the reduction of the corporate tax from 35 per cent to 30 per cent, while 57 per cent out of them were of the view that the gains from the corporate tax reduction will be nullified because of the cut in the depreciation rates.

Most of the CEOs surveyed said that the impact of the fringe benefit tax would be 'most severe' on Indian enterprises. They argued that advertisement and sales promotion expenses should not be included under fringe benefit tax.

The survey also pointed out that the cash withdrawal tax would be a big blow for small retailers and dealers.

However, 30 per cent of the respondents said that since the surcharge has also been increased from 2.5 per cent to 10 per cent, the overall benefit of the corporate tax reduction was only around three per cent.

Some software firms feel that a wide variety of payments would come under the ambit of fringe benefit tax. A recent survey also said that because of the impact of the fringe benefit tax, companies across sectors are likely to cut down on the increments that employees would get.

The proposal has invited criticism even from the Institute of Chartered Accountants of India, which has otherwise praised the finance minister for rationalising the tax administration.

Information collected from http://www.rediff.com/money/2005/au g/31tax.htm

Answered by Hemant Kumar , an ibibo Master, at 4:02 PM on September 23, 2008

As per the Finance Bill, fringe benefits shall be deemed to have been provided if the employer has incurred any expense or made any payment for the purposes of:

* (a) entertainment;
* (b) festival celebrations;
* (c) gifts;
* (d) use of club facilities;
* (e) provision of hospitality of every kind to any person whether by way of food and beverage or in any other manner, excluding food or beverages provided to the employees in the office or factory;
* (f) maintenance of guest house;
* (g) conference;
* (h) employee welfare;
* (i) use of health club, sports and similar facilities;
* (j) sales promotion, including publicity;
* (k) conveyance, tour and travel, including foreign travel expenses;
* (l) hotel boarding and lodging;
* (m) repair, running and maintenance of motor cars;
* (n) repair, running and maintenance of aircraft;
* (o) consumption of fuel other than industrial fuel;
* (p) use of telephone;
*
(q) scholarship to the children of the employees.

In cases where the employer is engaged in the business of carriage of passengers or goods by motor car or by aircraft, a lower percentage of expenses on repair, running and maintenance of motor cars or aircrafts or fuel expenses has been specified.

Similarly, for hotels, a lower percentage of the expenses incurred on hospitality has been specified for purposes of calculating the liability under the fringe benefit tax.

An employer liable to pay fringe benefit tax is required to furnish a return of fringe benefits before the due date as given in section 115WD.

Section 115WE outlines the procedure for the assessment of the return of fringe benefits filed by the employer and the determination of tax or interest payable or refund due and in either case the issue of intimation to that effect.

Who pays fringe benefit tax?

Under the proposed provisions, fringe benefit tax is payable by an employer who is either an individual or a Hindu undivided family engaged in a business or profession; a company; a firm; an association of persons or a body of individuals; a local authority; a sole trader, or an artificial juridical person.

The tax is payable in respect of the value of fringe benefits provided or deemed to have been provided by an employer to his employees during the previous year.

The value of fringe benefits so calculated, is subject to additional income tax in respect of fringe benefits at the rate of thirty per cent, as provided in section 115WA.

The fringe benefit tax is payable by the employer even where he is not liable to pay income-tax on his total income computed in accordance with the other provisions of this Act.

The benefit does not have to be provided by the employer directly for him to attract fringe benefit tax. fringe benefit tax may still be applied if the benefit is provided by a third party or an associate of the employer or by under an arrangement with the employer.

Answered by Ashwani , an ibibo Master, at 6:04 PM on September 22, 2008

Reaction of the Indian Incorporations as to the enactment of FBT-India Inc is quite nervous about the proposed fringe benefit tax and feels that the gains from the reduction in Delegation from Down Under scouts India ... The proposal to introduce a ‘fringe benefit tax’ had evoked strong reaction from the ... Inc has said that it is stamping its well attrition rate, exceeding 20 per cent for India Inc, with ... CBDT) has decided that the first instalment of fringe benefit tax ... on corporate social responsibility when his reaction was ...

Answered by Vipan Thapar , an ibibo Master, at 2:03 PM on September 22, 2008

India Inc is quite nervous about the proposed fringe benefit tax and feels that the gains from the reduction in corporate tax announced in the last Budget would be nullified by the cut in depreciation rates.

Nearly 70 per cent of the CEOs surveyed in the Associated Chambers of Commerce and Industry's Business Barometer survey were happy with the reduction of the corporate tax from 35 per cent to 30 per cent, while 57 per cent out of them were of the view that the gains from the corporate tax reduction will be nullified because of the cut in the depreciation rates.

Most of the CEOs surveyed said that the impact of the fringe benefit tax would be 'most severe' on Indian enterprises. They argued that advertisement and sales promotion expenses should not be included under fringe benefit tax.

The survey also pointed out that the cash withdrawal tax would be a big blow for small retailers and dealers.

However, 30 per cent of the respondents said that since the surcharge has also been increased from 2.5 per cent to 10 per cent, the overall benefit of the corporate tax reduction was only around three per cent.

Some software firms feel that a wide variety of payments would come under the ambit of fringe benefit tax. A recent survey also said that because of the impact of the fringe benefit tax, companies across sectors are likely to cut down on the increments that employees would get.

The proposal has invited criticism even from the Institute of Chartered Accountants of India, which has otherwise praised the finance minister for rationalising the tax administration.

Answered by Nagendra , an ibibo Master, at 8:02 AM on September 22, 2008