Focus only on high revenue yield areas

RUN UP TO THE BUDGET 2004-05/ ASSOCHAM

The Associated Chambers of Commerce and Industry (Assocham) has asked Finance Minister P Chidambram to bring in some more revenue-yielding services in the tax net in his forthcoming Budget.

But the industry association has added that while on principle, service tax should have a comprehensive approach on all services barring a few, its imposition should not be at one go. It should be in a phased manner with a much faster pace.The focus should be on services with a high revenue yield, Assocham said.

Assocham has also made a strong case for a Service Tax Act. "There is an urgent need for a separate self-contained Service Tax Act at the earliest. It is hoped that the Act is introduced in the forthcoming Budget," the industry association's pre-Budget memorandum to the finance minister said.

The chamber has said the government should provide for the revision of returns, filing of annual returns, rectification applications by the assessees and adoption of WTO classification of services to enhance the service tax regime in the Service Tax Act.

In the context of the export of services, Assocham has urged a more liberal approach by the CEBC and to appreciate that its current interpretation of the export of services with service tax will adversely impact competitiveness of service exporters.

"In essence, all service exports must be service tax exempt," the industry association has said.

"It is necessary to issue a suitable notification/circular by CEBC, clearly defining destination-based consumption and export of services for the purpose of service tax, taking into consideration the WTO definition and in tune with our exim policy," the Assocham memorandum said.

Assocham has also raised the issue of medium to small service providers for whom compliance could be difficult. So, it suggested the ministry to exempt or fix different threshold limits based on practical economic norms, at least for some services which are unorganised and small.