Service Tax - Some more abatement please
THE value for service tax in most cases is the gross amount charged, but in several cases there is an exemption popularly known as abatement. This is on the assumption that the gross amount charged includes several charges and expenses. So a hotel pays Service tax only on 60% of the bill, travel operator pays only on 25%; so does DTA. Even a chit fund company gets a 30% exemption.
But there are certain well deserving services crying for this abatement. Security Agency and Commercial coaching and training centres, just to name two.
The plight of the Security agencies is really pathetic. Many of these agencies are run by upright retired military officers who do not know the vile of civil society and almost all of them have service tax cases against them, because they do not know how to treat the tax officials. These agencies are providing a great service to the nation by providing employment to a large number of poor ex-service men. And they provide trained discipline security personnel for the trade and industry. But at the end of the day, these brigadiers and captains who commanded battalions are now standing for hours together outside the offices of Central Excise officers who have summoned them to record their statements for having intentionally evaded service tax. These soldiers who were ready to die for the country, are now scared of Service tax officers. And at the end of the day they end up making losses in their business as all ex-servicemen do.
They are supposed to pay service tax on the gross amount charged. Suppose this is Rs. 5000/ per security man per month. Usually the contract is an all inclusive one including service tax. From this, the security agency has to pay the salary of the person, provide for ESI, PF, provide him uniforms and has to incur a host of expenditure. His margin maybe just a couple of hundreds and he has to pay service tax on the whole amount. Why he doesn't get an abatement like the more powerful transporter or hotelier, is a mystery. They deserve a rich abatement. Pranab Babu was defence minister and he should be a little more kind to these unfortunate businessmen who really do not know how to do business.