FM to take up service tax with revenue secretary

The removal of service tax exemption for chartered accountants, company secretaries and cost accountants in the Budget this year has put them at a disadvantage compared to their legal counterparts.

Finance Minister P Chidambaram is expected to speak to the institutes after discussing the matter with the revenue secretary over the weekend.

"We are not against service tax. But the removal of exemption on non-exclusive services has put the members of the three professional bodies at a disadvantage as advocates, registered income tax practitioners and sales tax practitioners continue to enjoy exemption from 12.4 per cent service tax," T N Manoharan, president, Institute of Chartered Accountants of India (ICAI) said.

While the institutes submitted the memorandum to the finance minister yesterday, they met the minister of state for finance SS Palanimanickam on Tuesday. The institutes have demanded that all practitioners of similar services be treated at par.

"The exemption on non-exclusive services, which is now being removed, was provided in 1998 to ensure a level playing field as other professionals like advocates and registered practitioners were outside the levy of the service tax," Manoharan said.

The matter assumes importance as professionals of the three institutes fear they will be outpriced by advocates in various areas like taxation services, representation before tax authorities and company law board.

With the National Tax Tribunal set to come into force, the professionals and advocates will be directly competing for similar services.

ICAI estimates that its members would pay about Rs 350 crore as service tax on exclusive services like accounting, auditing and statutory certification services for 2005-06.