Govt target - Rs 1,06,000cr from service tax

The finance ministry today set an ambitious target of increasing service tax collection to Rs 1,06,000 crore in four years, and ultimately move towards a single goods & services tax (GST).

"We have to target service tax collection of Rs 1,06,000 crore by 2008-09 to achieve the Fiscal Responsibility and Budget Management (FRBM) Act target (of wiping out revenue deficit)," Gautam Ray, joint secretary in the finance ministry, said today.

The FRBM Act mandates government to cut fiscal deficit by at least 0.3% of GDP and revenue deficit by 0.5% every year. In order to attain this target, the government has to raise its revenues significantly, mainly from service tax.

Govinda Rao, director of NIPFP, asked the centre to bring all
services, barring a few, under the tax net with a threshold turnover limit of Rs 10 lakh.