Fringe Cringe

What is fringe benefit tax? How is it going to change my tax structure? A question the finance minister[FM] should ask himself, and he definitely will be struggling to answer. Proof?..read the definition of fringe benefit in the budget…

"any privilege, service, facility or amenity, directly or indirectly, provided by an employer to his employees (including former employee or employees) by reason of their employment; or any reimbursement, directly or indirectly, made by the employer to his employees for any purpose; any free or concessional ticket provided by the employer for private journeys of the employees and their family members; and any contribution by the employer to an approved superannuation fund."[Source: The great Indian Budget 2005, A Block buster presentation, which is like a Bollywood Masala Movie..there is something about everything for everyone all of 2 hours]

Got any clue? If No…You are on the same boat as the Finance Minister! He probably thought that since Australia and Newzealand have this tax we should also have one on similar lines. Afterall we are second to them in Cricket. But Mr. FM just see the amount of detail that has gone into putting such acts into place in those countries. You have made sure that CA' and Finance MBA's donot get to loose their tax planning consultancy assignments and their jobs. Mr. FM, why don't you implement the same laws on members of parliament and MLA's? If at all there is fringe benefits[FB], our MP's and MLA's know what FB is more than you and me. The stationary allowance, constituency allowence, petrol allowance, security allowance, telephone allowance, cooking gas allowance, usage of tourist bunglow allowance.......is it not endless

Does that mean that all Saturday night parties, employee picnics, Birthday Parties, reward schemes, motivational perks will be taxed?

The tax of 30% on any employee friendly expenditure[client visits, Diwali Bonus, Gifts to appreciate performance] is on the employer. So next time your employer throws a big induction party, he "can" pass the buck to you. Imagine a Birthday bash from your employer and you getting taxed on your birthday…What about the "chai-pani" expenditure?

Now, chances are that your employer will convert all benefits in monetary terms and add it to your salary. Now your ‘SARAL’ should have salary heads and non-salary heads..The FM wanted to boost spending by cutting taxes at individual level? Looking at this fine print it seems he has delivered a googly and gathered some serious reverse swing. This will go a long way in ensuring that we follow the philosophy "to each one, his own". What could have been his motivation? Cut unnecessary wastage of money in the name of pampering employees. Ensure corporate fiscal responsibility?

The Hindu Business Line sums it up as a Leftist way of taxing the capitalist, it says that the FM had the left hardliners in mind. Proof of this is the numbering of the section in budget 2005....115WB..[WestBengal?]. It is worth going into 115WC [Now, I know what you are thinking that is the section for valuation of Fringe Benefits]