Take-home Salaries To Rise; Fringe Tax gone

India's Finance Minister, Pranab Mukherjee proposed to abolish Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees, a measure, which may directly benefit salaried employees.

This was announced by Shri Mukherjee, while presenting the Union Budget for the year 2009-10 in Lok Sabha today. He also proposed to extend the sun-set clauses for deduction in respect of export profits under Section 10A and 10B of the Income Tax Act by one more year i.e. for the Financial Year 2010-11.

However, the Finance Minister proposed no changes in the Corporate Tax rates.

Shri Mukherjee stated that the tax exemptions are largely profit link under the present scheme of the Income Tax Act and such incentives are inherently inefficient and liable to misuse.

He, therefore, proposed to incentivise businesses by providing investment linked tax exemptions rather than profit-linked exemptions.

To begin with, the Finance Minister proposed to extend investment linked tax incentives to the businesses of setting up and operating ‘cold chain’ warehousing facilities for storing agricultural produce and business of laying and operating cross country natural gas or crude or petroleum oil pipe line network for distribution on common carrier principal.

Under this method, all capital expenditure, other than expenditure on land, goodwill and financial instruments will be fully allowable as a deduction, he added.