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Government should change the service tax collection regime for infrastructure consultants, industry body FICCI said today.
"FICCI's National Committee on Infrastructure has written to Finance Minister Arun Jaitley to have a re-look at its service tax collection regime for infrastructure consultant," it said in a statement.
The industry chamber urged the government to restore the earlier point of taxation including service tax to be paid within a specified time after receipt of payment from Service Receiver and charging of Service Tax via TDS route, it added.
"This would mean that when a client makes payment to the consultants for their services, he simultaneously deposits the Service Tax amount with the Service Tax Authorities against the Service Tax account of the Consultants," FICCI Infrastructure Committee co-Chairman K K Kapila said.
Regarding the accounting of CENVAT credit the refund can be claimed on same basis as in case of refund of Income Tax on reconciliation, he added.
"This mechanism would solve the entire problem, wherein, the government will be able to collect revenue faster than it does at present and ensure full compliance. Besides Service Tax Payers will heave a sigh of relief," Kapila said.
The government funded infrastructure projects are impeded by discrimination against the Consulting Engineering Companies by levy of Service Tax, he added.
Consulting Engineering firms provide services relating to survey, investigation, design, detailed project report and also supervision for implementation of such infrastructure projects.
"This critical issue originated with the introduction of Point of Taxation Rules, 2011 and subsequent amendment in the Finance Act 2012," Kapila said.
