Time to scrap the fringe benefit tax

The fringe benefit tax (FBT) is payable by the employer on the benefits it provides to its employees at the rate of 30 per cent. This tax has discouraged employers from promoting their employees’ welfare. The perks offered have been reduced. The major losers are those who frequently switch over jobs and are in the middle and junior management hierarchy of the organisation.

In the Act, no threshold limit has been specified; it covers all employers irrespective of the number of employees in their concern. The tax is of presumptive nature. It includes even the genuine business expenditure — hotel, board, travel, sales’ promotion expenses etc. Its maximum pinch is on the SSI sector and loss-making companies which have to pay tax on their legitimate business expenditure.

Impartial treatment to a few sectors of economy and not taxing government departments is unjustifiable. To be fair, the expenditure incurred by the government on the payment of fringe benefits to MLAs, MPs and in charge of various ministerial offices should also be covered under the FBT.

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In the US and UK, there is no FBT because inherently it is vitiated by inequity and complexities in administration. Australia is in the process of scrapping it. India should abolish or simplify it. The Finance Minister should shortlist the expenditure taxable, exclude genuine business expenditures, keep small business houses outside its ambit and do away with the separate system of filing of returns.



While introducing the FBT and Cash Withdrawal Tax last year, Union Finance Minister P. Chidambaram said, “I shall withdraw these taxes if they fail to achieve its purpose”. Now it is proved that the two taxes are illogical and have failed to serve their purpose.

Prime Minister Manmohan Singh has reportedly advised Mr Chidambaram to consider its withdrawal. I am sure, if the two taxes are withdrawn, Mr Chidambaram shall be proved wrong in his thinking of levying the two illogical taxes.

M. KUMAR, New Delhi

Welcome, but…

Union Communications Minister Dayanand Maran’s accouncement to peg STD rates at Re 1 per minute for all calls made in India irrespective of the distance (OneIndia Plan) is welcome and a step in the right direction. Simultaneously, he has also hinted at increasing the phone rentals which are already quite exorbitant.

This increase will, therefore, offset the benefit accruing to sparingly using customers which, the turn, will defeat the BSNL’s attempt at popularising landline connections whose clientele has already come down drastically. The monthly rental should also be reduced as the number of free calls had earlier been cut down from 75 to 50 a month.

D.K. AGGARWAL, Hoshiarpur


The OneIndia Plan is deceptive and does not have free calls. The monthly rental goes up to Rs 354 a month. If one compares the past rates since TRAI’s placement, this announcement again has favoured big commercial houses more than the domestic consumers.

The domestic consumer is most disorganised and oppressed. The authorities are punishing them. The monthly rental plan will burden each domestic consumer to the tune of Rs 119 to Rs 169. The OneIndia Plan shall increase the profits of non-domestic customers and burden domestic consumers. This is gross injustice as TRAI remains immune to our sufferings.



The BSNL and the MTNL deserve appreciation for launching the OneIndia Plan. But increasing the phone rental is not at all justified. All subscribers of landline phones do not make STD calls often. The monthly rental of the landline phones should be reduced to Rs 150 a month.


Volatility in shares

It’s difficult to predict the share market for two reasons — unhealthy allotment of shares through IPOs and control over the supply of shares in the market through agents. SEBI is unable to unearth the Yes bank and IDFC scam. Culprits in both the scams get maximum number of shares. It shows that the whole internal system is involved in these scams.

Firms also became smart. To maintain scarcity and high rating of their shares, companies hire agents who control the supply of shares. As a result, the fair market price of share cannot be evaluated.

Even after so many irregularities, SEBI has not taken remedial steps. If this is SEBI’s attitude, how can the investors’ hard-earned money be protected?


Pension for college teachers

Of the seven demands made by the college teachers’ union, Punjab Deputy Chief Minister Rajinder Kaur Bhattal has accepted five in principle. The Cabinet was examining the pension-cum-gratuity scheme, she said on January 25.

The Congress government planned the pension-cum-gratuity scheme in Punjab from April 1, 1992. This was on the school pattern for privately managed aided schools in Punjab. All the privately managed aided colleges functioning under the 95 per cent aiding pattern should also be covered. The teachers of these colleges will be grateful if the pension-cum-gratuity scheme is implemented from April 1, 1992.

K.K. KHOSLA, Ludhiana


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