Overwhelming section of the Indian Inc wants complete abolition of the Fringe Benefit Tax (FBT) on normal business expenses such as sales promotion, travel and gifts to customers in the forthcoming budget proposals for 2008-09 as these do not have any element of disguised perquisites to employees.

“Over 80 per cent of the CEOs and MDs would like the Finance Minister to abolish FBT on normal business expenses,” Assocham Secretary General D S Rawat told Deccan Herald quoting a Pre-Budget Survey on Preferences of Indian Inc. Three hundred twenty out of 400 CEOs and MDs participated in the survey held that it is a common business practice to provide gifts to customers, purchasing products as such gifts do not result in benefits to employees. It, therefore, no longer makes an economic sense to continue to subject employers FBT on such expenses.

Assocham President and Videocon Group Chairman V N Dhoot has conveyed the Indian Inc’s views on FBT at a meeting with the top officials of the Finance Ministry while submitting the Chamber’s Pre-Budget Memorandum, Mr Rawat said. 

Promotion expenses

Majority of CEOs and MDs have also argued that distribution of gifts is prevalent in industries like garment, white goods, FMCG, small accessories and automobile, which currently are under pressures for margins and thus removal of FBT on sales promotion expenses would provide them a great relief.

On the issue of Corporate Tax, 55 per cent of CEOs and MDs aired their voice by collectively expressing that surcharge on Corporate Tax  which is 2.5 per cent currently should be abolished and 30 per cent  Corporate Tax rate imposition should continue.