Service tax net to spread wider

Services like health and education will also fall in the service tax net sooner or later in the country, commissioner for central excise, customs & service tax, Mysore, PR Chandrasekharan said on Tuesday.

Participating in the open house session on 'existing and newly-introduced services under service tax', he said any tax was introduced in stages to make it acceptable to the public.

Perhaps, this was the reason for advocates not being brought under the service tax net, the other reason being that the government itself is the biggest litigant and will have to bear its burden. Similarly, health services are not covered yet because the government is the biggest healthcare services provider.

"But the day is not far off when all these activities will also fall into the service tax net. It is only a transitional stage now and, for the present, we can only speculate as to the services that may fall under this tax," he said.

As the states are pressing for the right to impose the tax, the commissioner said many of the present services covered under the tax might go to the states.

Introduced in 1994 as recommended by the Chellaiah Committee covering three services initially and now covering 100 services, he said its growth over these 13 years has been phenomenal.

Central excise covered less than a lakh assessees, while service tax had spread to 8.25 lakh people in 2005-06. "No wonder, this will further increase as more areas are brought under the service tax net," he added

"From Rs 410 crore in 1994-95, service tax revenue has gone up to Rs 13,000 crore in 2006-07. The present budget estimates an yield at Rs 51,000 crore under this head. In the years to follow, service tax will be the main revenue earner for the government," he said.