Wednesday, January 11 2006 16:59 Hrs (IST) - World Time -

New Delhi: Finance Minister P Chidambaram today (Jan 11, 2006) ruled out withdrawal of Fringe Benefit Tax, but agreed to simplify it by looking into glitches in the coming budget.

"If there are any glitches in the manner in which the tax (FBT) is administered, we can revisit the matter. They (India Inc.) asked for simplification. Some simplification can be expected in the budget," he said during an interaction with the Forum of Financial Writers here.

Ruling out withdrawal of FBT, he said taxing perquisites is universal practice, as it has both vertical and horizontal equity.

He said corporates understood this point and they asked for some simplification in FBT at their pre-budget meeting with him.

At the meeting two days ago, India Inc. pitched for removal of FBT or its simplification.

CII President Y C Deveshwar had said after the meeting, "If you don't abolish it (FBT), you can simplify it."

"There is a need to review the existing FBT provisions and simplify it. Genuine business expenditure incurred by corporates should be allowed deduction," FICCI Vice President N Srinivasan said.

Instead of FBT, Assocham president Anil K Agarwal and senior Vice President Venugopal N Dhoot said the Finance Minister should hike corporate income tax by two per cent to offset losses that Government would incur on account of scrapping FBT.

CII had also proposed that the proceeds from FBT be utilised in the infrastructure sector.

The controversial tax was introduced by Chidambaram in Budget 2005-06 in February last year and has been strongly opposed by various industry chambers.