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Service Tax contributes Rs.1.68 lakh crores to Indirect tax in 2014-15: Commissioner, Service Tax

Wednesday, June 03, 2015

Out of total indirect tax collection of Rs. 5.46 lakh crores, nearly Rs.1.68 lakh crores came from Service Tax which is nearly 30% of total collection in 2014-15, growing at the rate of 8-10% annually, a senior official from Service Tax said at an ASSOCHAM event held in New Delhi today.

The contribution of service sector in GDP has already reached 57% however the Service Tax contribution in total tax collection is still hovering around 14%. Therefore, it is explicit that the arena of service tax collection remains under exploited and has a great potential to grow, said the Principal Commissioner of Service Tax-III, Mr Satyavir Singh while inaugurating a national seminar on Service Tax organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Mr. Singh said, India’s services sector has emerged as a prominent sector in terms of its contribution to National and States incomes, trade flows, FDI inflows, and employment. The share of service sector in the Indian economy has increased significantly over the years and is growing by 8% annually.

Prior to Budget of 2015, the registration for Single Premises as well as for Centralised Registration was granted after verification of documents and premises.  This procedure has been modified and with effect from 1 March 2015, registration of single premise is being granted online within two days of filing the application and is subjected to post verification. We, as Commissioners in the field are regularly monitoring the pendencies and I am glad to inform you that despite the constraints due to large scale dislocation of the offices as a result of the restructuring of the department, the department is able to grant registration within two working days, barring few exceptions.

He said, the second significant change is in respect of penalty provisions vide Sections 73, 76 and 78. These provisions have been rationalised and harmonized to encourage voluntary payments. In case of voluntary payments along with interest, the quantum of penalties have been rationalized by reducing the percentage of penalty depending upon the stage of litigation i.e. prior to issuance of show cause notice, after issuance of show cause notice but before adjudication or after adjudication.  I would request the trade to take maximum benefit from these amended provisions, said Mr. Singh.

In case of man power supply and security services when provided by any individual, HUF or partnership firm to a body corporate, full reverse charge from 1st April 2015 already is effective in place of partial reverse charge mechanism.  Earlier service providers were required to pay 25% and service receivers 75% tax.

However, partial reverse charge mechanism will continue to apply in respect of certain other services so that service providers can utilize the CENVAT Credit available to them., said Mr. Singh.

On the basis of difficulties brought to the notice of Government by the trade, the period of taking CENVAT Credit has been extended from 6 months from the date of invoice to one year, added Principal Commissioner of Service Tax, said Mr. Singh.

The scope of advance ruling has been expanded to include all resident firms.  Earlier it was available only to public limited company.

The service tax has been enhanced to 14% from 01.06.2015 by assimilating Education Cess and Higher Education Cess from 12.36% for ease of calculation and step towards GST regime.

Further, Service Tax would be levied on service provided by way of access to amusement facility providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks and theme parks.  Also, Service Tax would be levied on service by way of admission to entertainment event of concerts, pageants, musical performances concepts, award functions and sporting events other than the recognised sporting events if the amount charged is more than Rs. 500/- per person for the right to admission to such an event.

These are some examples to make a point that if we deal composite transactions with composite levy i.e. GST, then life will become simpler for tax payers as well as tax administrators, further said Principal Commissioner of income Tax.

Other who also spoke during the conference were Mr S. Dutt Majumder, Former Chairman, CBEC, Mr J.K. Mittal, Co-chairman, ASSOCHAM National Council on Indirect Taxes and Mr D.S. Rawat, Secretary General, ASSOCHAM. (Source- ASSOCHAM).

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