Expert panel to study service tax

By Our Special Correspondent

NEW DELHI, JUNE 9. The Union Finance Ministry has constituted an expert committee to look into the issue of service tax. To be headed by the Director of the Bangalore-based Institute of Social and Economic Change, Dr. Govind Rao, the committee has been asked to submit its interim report by October-end and the final report by December-end so that its recommendations could be considered and included in the next general budget.

The revenue earning potential of service tax has been estimated to be huge, but procedural problems and agitation by selected service providers has prevented the Government from collecting only about Rs. 2,000 crores through this mechanism.

According to the Minister of State for Finance (Revenue), Mr. V. Dhananjay Kumar, the committee, comprising Mr. B. C. Rastogi, former Chairman of the Central Board of Direct Taxes (CBDT), Mr. D. B. Lal, former member of CBDT, Mr. Arvind Virmani, Advisor in the Finance Ministry, and Prof. Indira Rajaram of the National Institute of Public Finance and Policy, will specifically examine the existing system of service tax and recommend measures for extending the tax base and also the timing of when to include which sector under this tax net. The committee will also look into the structure of service tax to see which sectors should be taxed by the Centre and which should be left to the State governments.

The committee would also examine the existing procedure of tax collection and recommend measures for better collection and for reducing the collection cost. It would also recommend measures to make service tax compliance voluntary so that people find it easy to pay service tax, the Minister told presspersons here today.

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Section  : Business
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