The Hindu Business Line : To mop up service tax collections — Excise Dept launches public awareness programme

IN a bid to push up service tax collections in a big way, the Central Excise Department has now taken up a major public awareness programme through outdoor advertising and TV jingles in popular channels, to sensitise both providers and users of services to collect and pay the tax.

The promotion and marketing of sale of goods, through celebrity endorsements, by say Sachin Tendulkar or Aishwarya Rai, may well attract service tax now, under the head of `Auxiliary Business Services'.

Participating in an interactive session on `Service tax administration' organised by the Merchants Chamber of Commerce (MCC) here on Monday, Mr Biswajit Datta, Commissioner of Central Excise-Kolkata-V and Chairman of the special task force on service tax for Kolkata zone, said service tax collections will gain importance in the coming years and may emerge as the focal point among all indirect tax collections of the Government.

He felt manufacturing-centric excise collections may even come down, going by the prevailing business trends.

He said even as the indirect tax collections from central excise, projected to yield Rs 92,000 crore in 2003-04, have reached near saturation point now, the future will belong to service tax, considering that services account for 52 per cent of the GDP. Service tax, unlike central excise, is levied on the realised value of services, and the law pertaining to payment system is more like that for income-tax.

He, however, expressed major concern over the abysmally low collection figures in the Kolkata zone, going by the half-yearly returns (April-September) filed, "which is not at all commensurate with the income generated by the service providers".

The focus has now shifted from "collect" to "pay", after the Supreme Court judgment, and therefore it is the service provider and not the user of service who has to comply.

Some 58 services are now brought under the service tax net, against the initial telephones, insurance and brokerage services, when the tax was introduced through the Finance Act of 1994. He put the half-year collections from stock broking services in the Kolkata zone at Rs 5.13 crore. Mr Datta said the task force is now looking closely at services provided by advertising agencies and air travel agents.

According to Mr K.B. Agarwala, President of the chamber, a threshold limit in service tax exemption of say Rs 15 lakh annual turnover should be incorporated in the Act. This, he felt, would keep most of the small service providers out of the tax net and enable the tax administration to focus its efforts on collection from assessees who really count. He also sought a facility for adjustment of excess payment of service tax towards future liabilities, as otherwise the fund claims have to be filed with the department separately.

The chamber has also suggested that service providers who regularly submit compliance certificates in respect of the tax returns and payment of tax, should be outside the purview of visits by tax audit officials, except where cases of specific complaints are brought up.

Mr Agarwala said in 2003-04 (April-December), service tax collections had shown a 68 per cent increase to Rs 5,100 crore, against Rs 3,000 crore collected in 2002-03. The Finance Ministry had initially fixed a target of Rs 8,000 crore for the current fiscal, but has now raised it to Rs 10,300 crore, out of which nearly 50 per cent is expected from telephones, insurance and brokerage services, and another 25 per cent from IT services.

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