Email
Print
ShareBangalore: There were tremendous expectations from individual assessees of the finance minister's Union Budget-2009. The complete removal of the Fringe Benefit Tax (FBT) provisions, that were considered to be an administrative burden by corporates and the income tax department alike, is a welcome change.
But does this change mean that more money will spill into the pockets of employees? Will it ease the cumbersome accounting for employers and the revenue departments, as expected?
The KPMG tax team says that this is definitely a good move as FBT was not contributing to the revenue of the exchequer. It was also a huge hassle for companies to comply with the requirements; revenue authorities, too, found it difficult to process and assess taxes. They insist that this change will ensure that the earlier system of taxing employees' benefits is proposed to be restored.
Now, employees and employers are smiling away. "FBT was a draconian tax system. Now, companies will not think twice to offer perks to employees," said Sunil Prabhu, head of human resources with a multinational company. Mallika Tiwari, quality analyst with an IT company, quips, "Companies can now offer perks in the form of cars, accommodation and stocks to name a few, without thinking twice."
IT giants are viewing it as a progressive measure. "From a taxation perspective, increasing income tax slabs, removing surcharge on personal income taxes and the FBT stands out," says S Gopalakrishnan, CEO and MD, Infosys Technologies.
"Scrapping the FBT provision, increasing personal income tax slabs and abolishing surcharge on Income Tax are welcome measures," adds Jaswinder Ahuja, corporate VP and MD, Cadence Designs Systems, India.
CEO of Aricent, Sudip Nandy, says it is heartening that the FBT is abolished and and taxation on packaged software has been doubled as this will simplify business.
Earlier, FBT was also levied on employee stock options (ESOPs). Now, with the FBT removal, ESOPs are proposed to be taxed in the hands of individuals. Then, will this be burdensome to the employee?
Jaithirth, city-based advocate and tax consultant says that the implementation of this change spells good news for employers, but may not be so much for employees. Although there are no direct benefits, this change implies that employees could look forward to more indirect benefits.
