Govt ups service tax growth target to 60%

The Union finance ministry wants service tax collections to grow by 60% over the previous year’s figure since services now account for over 60% of GDP, which in turn is growing at 9%.

K Raghu N Chary, service tax commissioner of the Kolkata commissionerate, told FE that after a recent review meetingl, the finance ministry has asked all the commissionerates to increase their growth targets from 25-26% to 60%.

The government had earlier set a service tax collection target of Rs 50,200 crore in 2007-08 against Rs 38,169 crore in 2006-07 on all India basis. At that level, the target for 2007-08 would be 18% of the total indirect tax collection target of Rs 2,79,190 crore.

During the first quarter of the current year, service tax collections grew by 31.6% at an all India level.

The scope for increased collection has been created with the Union government bringing six more services within the ambit of service tax.

Chary said the Kolkata commissionerate has been given a service tax collection target of Rs 1,895 crore against the Rs 1,497.31 crore it collected in 2006-07, a growth target of around 26%.

This service tax collection would translate into 85% of the total indirect tax collection target of Rs 2,160 crore for 2007-08.

But, if the growth target is raised to 60%, realisation from service tax alone would be around Rs 2400 crore, more than the total indirect tax collection targeted for the year 2007-08 for the Kolkata commissionerate.

Chary said that the Kolkata commissionerate, currently having 16,000 assessees filing returns, is focusing on construction services, share broker services, rental services, business auxiliary services and works contracts to increase its collection.

Although from April to July it has detected 10 tax evaders, who evaded taxes adding up to Rs 4 crore, the commissionerate has its eye on many who are evading service taxes more than Rs 100 crore.

However, following the introduction of the six new services within the ambit of service tax, the Kolkata commisionerate is organising a registration camp on 26 and 27 July.