New Delhi, March 4: Finance minister P. Chidambaram today said he would introduce a new income tax act next fiscal that would axe the exemptions available to companies.
He also announced he would set up a group of experts that would include representatives from industry to finetune the controversial fringe benefit tax.
'But the tax itself will stay,' Chidambaram said at a meeting organised by the Confederation of Indian Industry. In the budget, a tax was slapped on what the government considers hidden perquisites ' or fringe benefits ' that companies give their employees, such as club membership, entertainment, phone cost reimbursement and contributions to superannuation funds.
Spending on sales and promotion has also been subjected to the tax, sparking an uproar in industry. But the minister has described this as a draftman's devil.
Chidambaram said: 'I will introduce a brand new income tax bill before the end of the next fiscal. A number of provisions and exemptions need to be cleaned up.'
Two committees on taxation have suggested that the exemptions should be removed to stem revenue leak.
Chidambaram also proposed a system through which the government could access production data and excise liabilities on a daily or weekly basis through an online system. 'There are about 80,000 excise assessees who pay about 90 per cent of the excise duty. What I want is all these 80,000 assessees to file the production data and excise liability online,' he said.
The minister clarified that firms will continue to pay excise on a monthly basis but by reporting daily or weekly, they would be able to reduce the physical interface with excise officials.