The forthcoming budget could seek some tweaking of the excise and service tax rates as part of efforts to converge the rates at a later stage. |
At present, the average excise rate stands at 16 per cent, while it is 12 per cent for service tax. |
While finance ministry officials admit that a complete convergence of the two rates is not possible in the immediate future, there is merit in moving towards a common rate since at present a company can avail a 16 per cent cenvat on a service which attracts 12 per cent tax. |
Officials said a single rate would also be essential to ease the transition to a general goods and service tax. |
They pointed out that though the service tax base had been widened, the new services were not generating greater revenue. |
"The increased service tax collection is mainly on account of a wider base and not because of higher collection from new taxes," an official said. |
The government has collected Rs 12,412 crore by way of service tax in the April-August period, which is around 65 per cent more than the collection of Rs 7,527 crore in the same period last year. |
Another proposal which the ministry is working on relates to introduction of mandatory electronic filing of tax returns for individuals. |