NEW DELHI: To simplify the tax structure, Indian industry can go to the extent of doing away with all the allowances only if the government reduces tax rates or allows exemptions so that the employees do not get adversely affected.
Newly appointed FICCI president Saroj Kumar Poddar told The Times of India that the complexity of fringe benefit taxes, which is levied on the allowances paid by the companies to their employees, adversely affect the day-to-day work of the companies.
He hoped that the finance ministry would simplify FBT in the coming Budget. For taxation, Poddar prefers the US system where everything is paid in the form of salary, which is taxable.
But, then government should also take care that the tax burden on employees doesn’t increase. And when doing so, he said government could give rebate on salary to make it tax-neutral.
Poddar said due to the current FBT system, education cess and dividend tax, the effective corporate tax rate, which have been brought down to 30% from 35% in the last Budget, has gone up to 40%.
And also because of the ambiguity in FBT, chances of harassment by tax sleuths are high. He opposed the idea of giving cast-based reservation.
He said it would be counter-productive and nobody’s interest would be fulfiled. Instead of this, he said, companies would like to join hands with the government to train them and make them employable.
He said FICCI would oppose the idea of reservation in the private sector as this kind of the policy did not serve any purpose in the last over 50 years.
SOURCE:THE TIMES OF INDIA