Service tax collections to reach Rs 1,00,000 cr by 2007-08

New Delhi, Sep 24 (UNI) Service tax collection will touch Rs 50,000 crore during the current year as against the targeted Rs 40,000 crore, and reach Rs one lakh crore by 2007-08, Industry chamber Assocham said today.

''The service sector has registered a substantial growth rate in the last couple of years and the trend will not only continue but also yield high revenue collections for the government,'' Assocham President Anil K Agarwal said.

Mr Agarwal said the Finance Ministry earned a revenue of Rs 7,750 crore through service tax imposition in 2003-04, which almost doubled to Rs 14,150 crore in the subsequent year that is 2004-05.

In fiscal 2005-06, the government earned Rs 23,000 crore through service tax collections and it fixed a target of Rs 34,500 crore for 2006-07 at the time of budget presentation for service tax collection.

This was revised by the Finance Ministry officials to Rs 40,000 crore as they exuded confidence that the way services are being expanded, the target for service tax collections should be set higher.

Assocham has pointed out that since the intention of the government is to move towards Goods and Services Tax (GST) by 2010, it is improtant that all states should introduce VAT at the earliest.

The central government should bring all services under the tax net barring basic essentials and public utilities. It is important that a comprehensive Service Tax Act should be put in place instead of amending the Finance Act year after year.

To compensate the states for the loss of the revenue, the Central Government should empower the state governments for imposing taxes on services. The Central Government should formulate a list on which the state governments would levy the taxes.

Similarly, separate rules and regulations should be formulated for service tax, it demanded.

It said that like RBI, a master circular of service tax should be issued every year, which also covers the list of notification issues in the last one year.

This will give benefit to trade and industry not only to update but clarify the doubts which may help to reduce litigation.

Besides, the government should provide wide publicity for e-filing of return and educate the assesses. The government should also give thrust to infrastructure facility in this regard in order to implement the said circular.

The chamber said that specified taxable services which involve physical performance, fall under rule 3 (ii) and the same are treated as services provided from outside India and received in India, if such services are partly or wholly performed in India. For charging service tax in such cases, the total value is to be taken for the purpose of levy of service tax.

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