‘Let States levy service tax’

The Ficci has recommended empowerment of States to levy service tax or sharing of service tax revenues between the Centre and States to compensate the latter for loss of revenue after the introduction of VAT system. This would require Constitutional amendments to incorporate service tax legislation and possible institution of a service tax act.

Ficci has also recommended that existent State taxes such as domestic trade tax, entry tax and luxury tax be considered in the move towards VAT. Significantly, Ficci asserted that there was no place for sales tax variants and taxes outside the VAT system could not be accommodated.