Service tax to net Rs. 5,000 cr.

NEW DELHI, NOV. 13. The Union Government is likely to mobilise Rs. 5,000 crores from service tax as against the budgeted target of Rs. 3,600 crores, for the current fiscal.`` We hope to reach a level up to Rs. 5,000 crores in service tax collection," Central Board of Excise and customs (CBEC) chairman, Mr. K. L. Verma, told PTI. Mr. Verma said higher collections would be on account of 15 new areas that have been brought under the service tax net from July this year.

The Central Government has brought banking, insurance, merchant banking, broadcasting, Internet service providers, paid websites and a host of other activities under the service tax net.

Some of the major companies that are now eligible for paying service tax include All India Radio, Doordarshan, Indian arms of foreign broadcasting companies, VSNL, MTNL, Wipro and other ISPs. Mr. Verma said higher service tax collections was likely to offset lower collections, if any, in customs and excise.

The Government had targeted Rs. 81,720 crores in excise and Rs. 54,822 crores in customs this fiscal.

However, continuing slump in global trade and the September 11 incidents in the U.S. have further dampened India's external trade leading to lower customs revenue in the last few months. Tax collections in the first half of the current fiscal recorded a negative 6.2 per cent growth mainly due to steep fall in corporate tax and customs duties revenue.

Direct and indirect tax collections in April-September were Rs. 77,422 crores as compared to Rs. 82,539.18 crores in the corresponding period last year. Indirect tax collections in the first half of this year were Rs. 52,871.79 crores against Rs. 55,998.41 crores during the same period last year. The slowdown in indirect tax collections are expected to be offset by higher collections in service tax.

The CBEC had recently clarified on the sectors that would come under the service tax net, in an effort to buoy up collections. After the announcement in the budget, the Government has amended the Service Tax Rules 1994 for implementing the new taxes on banking, insurance and 13 other sectors which were earlier out of the tax net.

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Section  : Business
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