| At the moment, service tax is not applicable to any service provided in the state, irrespective of whether the service provider belongs to the state or not. |
| The move is seen as an important step towards unified goods and service tax in the country from 2010, besides checking evasion of service tax by service providers taking advantage of the special status given to the state. It is not yet known if the Centre will transfer all the collection from the service tax to the Jammu and Kashmir or retain a share. |
| Though the central government had effected the necessary constitutional amendment allowing it to impose service tax over the whole of India including J&K two years back, the ratification of the law by a majority of states had been pending. |
| "About 16-17 states have given their consent, so the service tax is most likely to be extended to Jammu and Kashmir this year," a senior Central Board of Excise and Customs official said. |
| "Service tax applies to all parts of India. Purely from tax policy prospect, it's all parts should be treated uniformly," said Satya Poddar, Partner in accountancy firm Ernst & Young. Poddar said due to political, national and social reasons, J&K was kept out of the central service tax net. |
| However, J&K levies its own version of service tax through its Sales Tax Act, leading to double taxation. For example, a Delhi-based service provider pays service tax on a courier sent to Srinagar here. The courier is then again taxed locally in J&K as the 'service' is received there. |
| "There have also been cases in which both service provider and receiver are from outside the state, but the service has been shown as received in J&K in order to evade service tax," a Service Tax official said. |
| Currently, there are 100 services under tax net and the revenue from the tax grew by more than 60 per cent in 2006-07 to Rs 37,352 crore. Collections under this head are pegged at Rs 50,200 crore in 2007-08. The tax was introduced in 1994. |
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