New Delhi, Dec. 23: The government will look into the anomalies in fringe benefit tax and could even revise the rates under some heads and simplify rules for the convenience of taxpayers, M.S. Darda, chief of the Central Board of Direct Taxes, said today.

“FBT was fast becoming a trauma,” he said.

The government is in the process of classifying business expenditures which could attract FBT. Darda added that the rules would be simplified to make the tax regime “painless”.

From April, the government would launch a scheme to collect taxes from large manufacturing units whose tax liabilities from all accounts ? excise, income tax and others ? exceeded Rs 5 crore through a single window system.

In the last budget, the government had come out with the controversial 30 per cent tax on fringe benefits given by firms to employees. However, protests from companies as well as salaried taxpayers forced it to issue a series of notifications marginally diluting the tax regime. But it still maintains that the tax is a necessity.

The government, which has already collected Rs 1,750 crore as FBT, aims to collect up to Rs 3,000 crore this fiscal.

The tax was framed to restrain companies from trying to pass on rewards to employees through non-taxable perks.

However, critics feel, in the process, the government is taxing legitimate corporate expenses such as entertainment and travel as well as employee morale boosting practices like parties for staff on festive occasions.

“The whole problem with this tax is that it leaves too much power in the hands of the income tax officer to decide which is a fringe benefit and which is not ... It means too much paper work as there is a separate filing of returns on these supposed fringes. It also means that firms have cut down on normal employee welfare and the tax burden is being passed on to employees,” said Sudatto Sen, a senior chartered accountant.

In fact, aggrieved taxpayers have already approached various high courts challenging the legal validity of FBT. These cases have forced authorities to stop coercive actions to collect the tax.