CBEC to be renamed due to phenomenal service tax rise

Written by Prachi Karnik Pradhan | Mumbai, Jul 12 | Updated: Jul 14 2008, 05:10am hrs
The ministry of finance is contemplating changing the name of the Central Board of Excise and Customs (CBEC) to Central Board of Excise, Customs and Service Tax (CBECST), announced PC Jha, chairman CBEC. This is because service tax, the latest entrant to the family of indirect taxes, has shown a phenomenal growth ever since it was introduced in 1994.

Jha, who was speaking on the sidelines of the interactive meeting on Indirect Tax Issues and Dispute Resolution Scheme at the Indian Merchants Chamber on Saturday, said the department had collected Rs 410 crore from 3,900 assesses from three services in 1994-95. Today, with 106 services brought under the ambit of service tax, it covers over 5 lakh assesses with around one lakh (about 20%) from Mumbai alone, he said.

He further noted that service tax compliance is comparatively high with no penal provisions being made applicable as in case of excise and customs.

Jha said that tax rates have been drastically reduced in case of customs from 300% to 10%, from 110% to 12% in case of excise but the tax rates in case of service tax has been increased from 5% to 12.36%.

The department aims at bridging the gap between compliance level by law and the compliance level by the taxpayers. Besides, the department is making all efforts to do away with the anomalies in the service tax compliance and expects the tax payers to comply with the provisions of the law.

Jha also said that the collections from indirect taxes during 2008-09 is Rs 3,20,000 crore, of which, estimated collections from customs is Rs 1,18,930 crore, excise Rs 1,36,610 crore and service tax Rs 64,460 crore. The expected collections from Mumbai include Rs 41,740 crore from customs, 17,000 crore from excise and Rs 26,150 crore. Jha said that the service tax collections would be much more than the projected figures.

He also said that during 2007-08, the department had collected Rs 2,80,738 crore from indirect tax including Rs 51,113 crore from service tax, Rs 1,04,091 crore from customs and Rs 1,25,514 crore from excise as against the budgetary estimate of Rs 2,78,013 crore.Of the total collections, Jha said, the collections from Mumbai alone was Rs 64,899 crore (23%) with service tax contributing Rs 17,314 crore, customs Rs 34,395 and central excise Rs 16,190 crore.

Meanwhile, Jha noted that with the post budget reduction in duty on petroleum products the collections from central excise would face a major setback. However, with higher collections from service tax, the department would be able to curtail the setback, he added.