Hike in Service Tax rate?
The 12% Service Tax is a big burden and a nightmare to many traders, especially small operators like Security agencies. But hold your breath, it may go up. “For bringing about a GST regime, the government will also have to increase service tax rates and harmonise it with the excise duty structure”, revenue secretary KM Chandrasekhar is reported to have remarked at the India Economic Summit. But the good news is that the Revenue Secretary also said that, “Indirect taxes need to be lowered over a period of time so that they are spread more evenly and in turn give a boost to the country’s trade and commerce.”
The revenue department has asked the Indian Centre for research and International Economic Relations to do a cost benefit analysis of the impact of tax exemptions on indirect taxes. The RS was not very happy with the tax to GDP ratio though it has increased from 8.12% in 2001-02 to 10.24% 2005-06 and is likely to grow over 11% this fiscal as it is still less than what it is in developing economies like Brazil and South Africa.