Financial Daily from THE HINDU group of publications
Monday, Sep 19, 2005
Financial Daily from THE HINDU group of publications Monday, Sep 19, 2005 |
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Industry & Economy
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Income Tax Remove expenses on sales promotion from FBT ambit, says FICCI Our Bureau
New Delhi , Sept. 18 THE Federation of Indian Chamber of Commerce and Industry (FICCI) President, Mr Onkar S. Kanwar, has urged the Finance Minister, Mr P. Chidambaram, to remove expenses on sales promotion and payment for use of "brand" or to a "brand ambassador" including publicity, from the ambit of the fringe benefit tax (FBT). Mr Kanwar, while appreciating some of the positive amendments that have been carried out, has stated that these did not go far enough. "The Clarificatory Circular No. 8/2005 dated August 29 has also belied our expectations and the genuine business expenditure not even remotely connected with employer- employee relationship, is subjected to FBT, which is neither fair nor warranted," Mr Kanwar said in his letter to the Finance Minister. Mr Kanwar has pointed out that samples to consumers, doctors, celebrity endorsement and consumer promotion which forms sales promotion and publicity activities, would now attract FBT, though these expenses are not, in any way, connected with the employees. For instance, there is no employer-employee relationship between a pharmaceutical company and doctors to whom it gives out free samples. So is it in the case of expenditure on free offers (with products) to trade or consumers. "These are genuine business expenditures and should not attract FBT," he said. Adding that due to this bottomlines of FMCG, pharma among others would be adversely affected.
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