FBT fails to swell government kitty

The finance ministry has reasons to worry about the low level of tax collection  through the Fringe Benefit Tax. The Controller General of Accounts data shows a mop-up of only Rs 641 crore (Rs 6.41 billion) up to August 31.

However, the online tax accounting system of the income tax department indicates a marginally better FBT collection of Rs 790 crore (Rs 7.90 billion) during the first five months of the fiscal.

Officials told Business Standard that the figure was expected to improve with the cheques deposited by companies on August 31 to be credited and taken into account by the end of this week. This is the first FBT installment after its introduction this year.

The central board of direct taxes was looking into the reasons behind the lower mop-up, officials said, adding that the department would now examine whether companies which had made provisions for the FBT in their first quarter accounts had deposited the same or deferred it for the next quarter.

"Sometimes, companies may not have the liquidity and may postpone the payments," an official said. Ministry sources said a mere Rs 40 crore (Rs 400 million) had been collected after clarifications regarding the tax were issued.

The government has collected Rs 60 crore (Rs 600 million) through the banking cash transaction tax (BCC) and Rs 770 crore (Rs 7.70 billion) by way of the securities transaction tax (STET) up to August 31. 

The overall direct tax collection of Rs 28,600 crore (Rs 286 billion), inclusive of the FBT, BCC and the STET, has registered a healthy 35 per cent growth during the first five months of the current fiscal over the previous year's collection of Rs 21,200 crore (Rs 212 billion).

Income tax collection up to August 31 increased to Rs 13,822 crore (Rs 138.22 billion), a rise of 8.84 per cent, compared with Rs 12,700 crore (Rs 127 billion) last year. Corporation tax collection during April-August was  Rs 13,258 crore (Rs 132.58 billion), an increase of over 58 per cent, compared with Rs 8,400 crore (Rs 84 billion) during the same period in 2004-05.