Pvt taxi operators for 90% tax exemption

While the Union finance minister P Chidambram has increased the service tax from eight per cent to over 10 per cent in the Union Budget 2004, the minister has exempted the taxable services provided by rent-a-cab operators up to 60 per cent.

The operators will be required to pay service tax of 10 per cent on 40 per cent of their taxable income and 60 per cent of their taxable income will be considered as expenses and will be exempted from tax.

"We have represented to the finance minister, seeking exemption on 90 per cent of our taxable income. The minister assured us and has agreed to exempt 60 per cent of our taxable income and we are required to pay service tax of 10 per cent on 40 per cent of our taxable income," said Anil Sharma, proprietor of Impact Travels, the largest private taxi operator in Madhya Pradesh and president, All Madhya Pradesh Taxi Owner Association (AMPTOA).

Sharma represented to the Central government on behalf of all the private taxi operators of the country.

The finance ministry, in a notification dated July 9, had stated, "In excise of the power conferred by Section 93 of the Finance Act 1994 (32 of 1994), the Central government, being satisfied that it is necessary in the public interest to do so, hereby exemption taxable service provided by a rent-a-cab scheme operator in relation to renting of a cab, from so much of the service tax leviable thereon under Section 66 of the said Act, as in excess of the service tax calculated on a value which is equivalent to forty per cent of the gross amount charged from any person by such operator for providing the said taxable service.'

"The service tax has been increased to over 100 per cent in the last two years and the private taxi operators were discriminated from other modes of transport like the railways and the airlines among others, who are not required to pay the service tax. We will further represent to the government to increase the exemption limit to 90 per cent," said Sharma.

The organised sector in the private car operator constitutes around 50 per cent, while the remaining 50 per cent is unorganised.

Private taxi operators have to bear major expanses in the form of interest paid to the banks and financial institutions, depreciation, fuel, insurance, road taxes, parking charges, toll tax charges, drivers salary amongst others.