Govt to issue circular on service tax by June 15

New Delhi, May 30 | Updated: May 31 2007, 05:30am hrs
With a view to simplifying service tax-related issues, the government is planning to come out with a comprehensive circular by June 15 that will give details about all 100 services under the service tax net and related procedures.

A new comprehensive circular will replace all the present circulars that will clarify all ambiguities will be issued by the board by the middle of June, PC Jha, member, Central Board of Excise and Customs (CBEC) said at a conference organised by Assocham on Wednesday.

The move comes in the wake of the Rustagi committee report suggesting simplification of service tax circulars.

To prevent any further doubts on service tax, the government has also decided that the board and not the Director General of Service Tax would issue all circulars.

The finance ministry is also likely to bring more services under the tax net in the future. While the contribution of services to the gross domestic product (GDP) has increased to over 50% in the last few years, service tax provides only about 9% of all taxes collected. In such a scenario, the potential of service tax is greater compared to customs and excise duty,Jha pointed out.

Meanwhile, the department is also planning to come up with measures to increase collection of service tax, the member added. It is studying the feasibility of setting up two more commissionerates at Pune and Hyderabad, which have recorded one of the highest collection of service tax. It has also created about 5,000 new posts for CBEC. Of this, about 1,700 posts will be especially for service tax officers in Delhi and Mumbai where the staff strength is less.

Jha also asked corporates not to shirk from paying their service tax dues. With a target of Rs 50,200 crore for service tax collection for 2007-08, it is essential that companies pay their taxes on time, he added.