Finmin divided over CBDT proposal to cut service tax

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Gireesh Chandra Prasad: New Delhi, Dec 03 2012, 03:22 IST

of the common man to consume more, thus boosting the economy. The common man bears the impact of all indirect taxes including excise, customs and service tax that gets built into a purchase. Since he does not get input tax credit, there is a case for moderation in the rates, goes the thinking. It is not fair to burden one class of assessees too much, according to some in the government.

Service tax, which accounted for only 5.3% of the total indirect taxes in 2003-04, has now grown to be 23.5% of the indirect tax receipts in 2011-12 at Rs 95,000 crore. The ministry expects it to touch Rs 1,24,000 crore this fiscal.

Direct contest over indirect tax

* CBDT proposes to slash 12% levy for final consumer to help boost consumption

* CBDT also feels need to cut service tax rate to 8% to introduce the proposed GST

* In FY13, India may collect R5.6 L cr from direct taxes & Rs.5.1 L cr from indirect taxes

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pk | 03-Dec-2012Reply | Forward

Yes, it is in fact time that the finance ministry reduces the service tax rate to 8%. The inflation caused due to this is also glaring. Further, it should take concrete steps to trace out those who are not paying taxes. The coverage needs to improve.