Service Tax Collections – follow the Pak example

By Vijay Kumar

Pakistan has become a pioneer in tax reforms and it is acknowledged right across the world. May be we can learn a couple of things from them especially on LTUs which are already functioning there. Now Pakistan has come up with an easy way to collect Service Tax on phones. The Head Office of the telephone company is required to pay the tax to the Government by the 21st of the next month. A lot of accounting, reporting, registration and such other hassles can be avoided if we follow this system. We can also follow this system for certain major service providers, especially state owned ones. For example BSNL can make one payment towards Service Tax for all its offices and may be this can be done once in a month. This facility can be extended to services like:-

• general insurance

• leased circuit;

• Telex, fax etc of the Telegraph Authority.

• Banks

• LIC

An officer was telling us the other day that a huge amount of Service Tax can be collected at virtually no cost if a Service Tax of one rupee is levied on each railway ticket. At the end of the month, quarter or year, the Railways can be asked to issue one cheque for the tickets issued by it throughout India. That will be much better than collecting pennies from barbers and cobblers in the name of Service Tax.