Telecom cos under FinMin scanner

Finance ministry is looking into the slow growth of service tax in the telecom sector, one of the top service tax payers, and whether some companies are evading tax through technical loopholes.

Sources in the ministry said the growth in service tax collections from the telecom sector had been quite sluggish this year so far. The sector has shown a meagre growth of 7-8 per cent in service tax collections inspite of the fact that the sector is growing at a rate of over 30 per cent.

"The Central Board of Excise and Customs (CBEC) has given the task to a committee for examining the reasons of slow growth in service tax collections from the telecom sector. The committee has also been asked to look into whether the companies were indulging in tax evasion through technical loopholes," the sources said. The sector contributed Rs 2565 crore during first six months of April-September 2006 as against Rs 4207 crore during 2005.