Enough has been written about the tax itself. And, considering its pernicious and often inequitable nature, more will be. Says Ernst & Young, which has a thriving human capital practice: “The legislation leaves room for many ambiguities, doubts and potential legislation”. It also “creates some real possibilities of economic double taxation”.

Now that the defence launched by Corporate India has failed, it is time to consider what impact FBT will have on you. First, salary hikes this year are likely to be lower as companies rework their sums. Second, you may well see some of the softer benefits that HR managers are so fond of doing a vanishing act.

“The people who are going to be hit the most are those in the junior and middle levels,” says Mumbai-based HR consultant D. Singh. “The big boys will still have their foreign junkets. Scholarships for their children will continue. It’s the guest house in Darjeeling, constructed to provide a cheaper holiday option for the rank and file, that will be closed down.”

Among the many items that Chidambaram has brought into his net ? and he always adds more ? the cost of telephones and mobiles will be borne by most companies. Entertainment and hospitality too should merit similar treatment. So also sales promotion and publicity.

Where the pinch is likely to come is in free or concessional tickets. Other areas under the cost scanner will be travel, maintenance of motor vehicles and, sadly, superannuation benefits. “Companies with a younger employee age profile will definitely use the chopper on retirement benefits as the staff would rather have cash in hand than participate in a scheme that kicks in decades later,” says Singh. “More mature companies ? with an aging workforce ? will probably pick up this tab.”

How much of an impact FBT has on you will depend on your employer. Companies like ITC have decided to absorb the entire FBT burden. But ITC has the money; it can do so without burdening its bottomline too much. Most others will take the middle road ? pass on some of the tax and absorb some.

What are the strategies to cope with FBT? According to Hewitt Associates, most companies will try and use technology (video conferencing etc.) to reduce travel costs. They will also redesign the perks package. More than 85 per cent of the companies in a recent Hewitt survey said they would resort to these measures.

However, a formidable 62.1 per cent also said that they would rationalise costs on items such as festival celebrations and maintenance of guest houses. Infosys, which is running a 500-room hotel at its Bangalore campus, will have to take a closer look at its numbers. (The company pays the FBT, of course. But it eventually impacts the employees’ package.)

It’s not just Infosys. Foreign companies are also crying foul. According to the US-India Business Council, American companies will have to rethink their investment plans as part of the cost advantage of working in India has gone. Both the leading chambers of commerce ? FICCI and CII ? have said that FBT will hit competitiveness.

Is Chidambaram worried? Not at all. And employees need not worry too much now. The booming economy will ensure that salary hikes are at least reasonable. But at the first sign of a slowdown in growth, the expenses under FBT will begin to feel the heat. Chidambaram hasn't created a disaster today. It's in dire times that the bomb will go off.