BUDGET WISHLIST: Service tax

CEOSPEAK: Vinayak Chatterjee, Chairman, Feedback Ventures

"We anticipate no revision of the Service Tax in this Budget. The rate of service tax at 12 per cent is suitable for the country and should be kept stable for it to propel GDP growth."

Chamber-Speak

FICCI
All services should be brought under the ambit of Service tax barring basic essentials and public utilities including E&P activities related to oil and gas, construction activities for infrastructure and rentals for commercial establishments, particularly hospitals and healthcare services.

Chambers of commerce and trade associations registered under Section 25 of Companies Act or any other statute should be outside its ambit

CII
More services should be brought under the tax net. Also few services related to exploration, development and production operations of oil and gas, construction activities for infrastructure projects and registered trade and industry associations should be kept out of the purview of Service tax

STATE OF PLAY

S Madhavan, Leader Indirect Tax Practice, PricewaterhouseCoopers

The service of renting of commercial property (assuming it is a service) has become problematic for the industry. Apart from the tax on such rentals, the recent classification that the provider of the service cannot avail credits of relevant input service taxes has added to the overall tax costs on such rentals. It is hoped that the Government will address this issue since it has significant implications for retail, IT/ITES sectors etc.

The definitions of "business support services" and "business auxiliary services' are complexly worded and require legal interpretation. There is an urgent need to properly define these in order to bring out the true scope of services.

The rules relating to export of services are yet unclear. The expressions 'provided from India' and 'used outside India' are open to varied interpretation. Appropriate clarifications relating to these are much needed.

The provisions pertaining to imports of services incorporate terms such as 'permanent establishment' and 'fixed establishment', which are not defined therein. As these provisions have major implications for business and trade, it is important to have clearly drafted definitions for such contentious expressions.

The coverage of the CENVAT Credit Rules, 2004 should be expanded to include services of commercial property rentals, business auxiliary services, business support services and telecommunication services. This will facilitate in availment of credits and reduce procedural complexities.