Rating agency Crisil Ltd on Thursday said the proposed fringe benefit tax will cost Indian corporates Rs 430 crore (Rs 4.3 billion) while it estimates seven per cent GDP growth in 2005-06 due to the positive proposals announced by Finance Minister P Chidambaram.
Under the fringe benefits, Rs 300 crore (Rs 3 billion) would come under direct benefits and Rs 130 crore (Rs 1.3 billion) under deemed benefits, Crisil director G Ravishankar told reporters in Mumbai.
Ravishankar, while presenting 'India -2005-06: Economic Outlook', said the Indian corporates must take necessary steps to bring down these expenses towards fringe benefits.
Crisil executive director and chief economist Subir V Gokarn said the country never had such a favourable macro economic growth environment and it is estimated to touch seven per cent GDP growth in 2005-06.
He said India's growth story is to move further as there are concrete direct tax initiatives and committed funds towards infrastructure in the Union Budget.
"Though there may be revenue shortfalls, fiscal deficit is expected to be in manageable limit as there is check in government spending. Funds committed in this Budget, especially for roads, would bear fruits as there is a system to absorb that," he said.
Gokran said one of the key drivers of economic growth would be buoyancy in tax collection and corporates would be major contributor towards tax system.