Tax mop-up may touch Rs 40,000 cr

Service tax collections this fiscal is expected to touch Rs 40,000 crore, exceeding the budget target of Rs 34,500 crore, Central Board of Excise and Customs (CBEC) Chairman V P Singh said.

Addressing a seminar on service tax organised by Assocham, Singh said the first Large Taxpayer Unit would start functioning from October 1 at Bangalore followed by a unit at Chennai on January 1, 2007.

Singh said that the revenue department had also initiated a pilot project in the capital as per which 22 post offices have been mandated to accept applications for registration of service tax and also service tax returns.

Chief commissioner of central excise, Delhi, S C Mathur blamed service tax payers for evading payment and pointed out that 50 per cent of those that fall in the service tax net have been escaping their service taxes dues.

R Sekar, joint secretary (tax research unit) in the finance ministry said the revenue department would soon issue a clarification that even recipents of the services of the goods transport agency can claim abatement.

Sekar said the issue whether receipents can claim abatement had been raised even by the audit department. "We are discussing the issue with them after which we wll issue the clarification," he said.

To a demand raised by the tour operators to increase the abatement to 90 per cent from 60 per cent at present, Sekar said that if the tour operators could prove they were 'pure agents' as defined by valuation rules then they could pay the tax only on the commission amount.

'Tour operators generally claim a lumpsum from the tourists and do not give the break-up of their commission in the bill. If they can show their commission seperately, then the tax can be paid only on that amount,' he said.

Responding to a query from an courier company to treat some of its services as a Goods Transport Agency and provide abatement at par with the GTA, Sekar said, there was a concious decision not to provide abatement to a couriers as it is a high end service.

'There are some instances of a courier companies wrongly claiming abatement by showing themselves as a GTA,' he said.

Asked if the exporters could claim credit on the service tax paid to commission agents, he said that the drawback rates notified recently had factored in the average incidence of the service tax borne by exporters. 'If the exporters want to avail of more input credit then they should apply for a brand rate of drawback,' he said.

Sekar said that there was also no change in the present policy to calculate the incidence of the service tax at the point of receipt of payment. He said in response to suggestions that the department could consider changing the point of incidence of the tax to the point of issue of invoice.