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Journalism of Courage
Even before the Budget is announced, the Finance Ministry has given a clear indication of how it hopes to raise some of its revenues. For the first time in its history, it has decided to set up Commissionerates of Service Tax in six cities — Delhi, Mumbai, Kolkata, Chennai, Bangalore and Ahmedabad.
Till now, service tax had been handled by the the excise administration. Finance Minister P Chidambaram, however, is learnt to be in favour of targeting service tax as a major source of additional revenue in the coming Budget.
The new Service Tax Commissionerates will be full-fledged operations, along the lines of Income Tax and Excise commissionerates. Their job will be to identify new services which can be taxed and to ensure compliance in service tax payments. Blossoming metros like Hyderabad and Pune could also be added to the list.
At present, 58 services come under the tax net. At least 25 more services could soon be taxed, The Indian Express has learnt.
The Finance Ministry has clearly identified service taxes as the next big money-spinner. For one, it immediately broadens the tax base and ropes in those who may not pay income tax but spend money on services like restaurants, telephones, laundry etc. Also, it is seen as a fairer mechanism as, in the absence of agriculture tax, it is the only way to make rich farmers contribute to tax revenues through the services they use.
At present, services are taxed at a rate of 8 per cent but to make the pill sweeter, officials are studying whether luxury services should be taxed at a higher rate than others.
