Supreme Court asks Government why prostitution cannot be legalised if they cannot curb it. Will there be service Tax?
YESTERDAY, the Supreme Court asked the government, "When you say it is the world's oldest profession and when you are not able to curb it by laws, why don't you legalise it? You can then monitor the trade, rehabilitate and provide medical aid to those involved in the trade."
Once this is legalised, perhaps Service tax can be levied and prostitutes will be asked to issue invoices when they receive payments and may be even subject to Audit. Let us hope they will not be asked to provide a sample of the service they provide and let us hope there would be no issues on valuation of services – like what will they do where the consideration received is not wholly or partly consisting of money? And will the pimps be liable to pay service tax under Business Auxiliary Service?
What would be the status if a foreign prostitute who has no office in India comes to India on business – will the client be liable to pay the tax? And what would be the position if an Indian prostitute does business abroad? Will it be export of services?
Will the expenditure of hiring a prostitute for a client be allowed as business expenditure under the Income Tax Act?