Date:02/03/2006 URL: http://www.thehindubusinessline.com/2006/03/02/stories/2006030202621900.htm

Back Concern over service tax hike plan

Our Bureau

Construction sector `will be hit'

Nothing has been mentioned about service tax on goods transport agencies.

Mangalore , March 1

The Union Budget 2006-07 has evoked mixed responses among the members of trade and industry in Dakshina Kannada district.

While they have welcomed the proposal to set up an ultra-modern thermal power project in coastal Karnataka, they have expressed concern over the proposal to increase service tax from 10 per cent to 12 per cent.

Mr A. Srinivasa Rao, President of Kanara Chamber of Commerce and Industries (KCCI), told Business Line here the Union Government's decision to set up ultra-modern thermal plants in five areas in the country, including the one in coastal Karnataka, will help improve power situation. This will give a boost to the development of the area.

Expressing concern over the Government's move to increase service tax , Mr Rao said that it would have a major impact on the construction industry. The cost of flats and commercial buildings will go up. Added to this, the Budget has not covered anything on the cement sector, he said.

Nothing has been mentioned about service tax on goods transport agencies, though various trade and industry bodies had submitted memoranda in this regard to the Finance Minister.

At present, goods receiver has to pay service tax. Trade and industry bodies are opposing this, he said.

Endorsing the views of Mr Rao, the President of the Karnataka Cashew Manufacturers' Association, Mr K. Prakash Rao, said the they are disappointed with the move to increase service tax.

Mr G. Giridhar Prabhu, Proprietor of Achal Industries, said that the Government is planning to collect `astounding' amounts from this move. Mr Prabhu said that more industries are coming along coastal Karnataka, hence an ultra-modern thermal plant is a necessity.