The Finance Minister Shri Pranab Mukherjee while presenting the Union Budget 2010-11 in Lok Sabha today announced that rate of tax on services will be retained at 10% to pave the way forward for Goods and Services Tax (GST). Shri Mukherjee said that all services are not being brought under service tax at this stage. He, however, announced that certain services hitherto untaxed would be brought within the purview of service tax levy. These services will be notified separately, he added.
Shri Mukherjee informed that the new proposal relating to Service Taxes are estimated to result in a new revenue gain of Rs. 3,000 crore.
The Finance Minister said that certain legislative changes are proposed to be made to plug revenue leakages, to remove distortions and he clarify certain doubts that have arisen over a period of time. The details of these proposed changes have been provided in the Finance Bill and other Budget documents, he added.
Shri Mukherjee pointed out that Export of Services, especially in the area of Information Technology and Business Process Outsourcing (BPO), generates substantial employment and brings in foreign exchange. He said that process of refund of accumulated credit to exporters of such services will be made easy by making necessary changes in the definition of export of services and procedures.
Acknowledging the yeoman services of accredited news agencies which provide news feed on line in disseminating news, the Finance Minister announced that such news agencies which meet certain criteria will be exempted from Service Tax.