The Hindu Business Line : April-Oct service tax revenue falls short of target by Rs 900 cr

The service tax collections for the first seven months (till October 31) at Rs 3,705 crore have fallen short by nearly Rs 900 crore of the pro rata target for the period. This is despite achieving a 7 per cent growth in the first quarter.

The target for the whole year is Rs 8,000 crore, up from the Rs 4,025 crore achieved during 2002-03. A special drive is planned by the department on the voluntary compliance front to achieve the projected target.

Participating in an interactive session organised by the Confederation of Indian Industry, eastern region, here on Monday, the Director-General, Directorate of Service Tax, Mr K.P. Singh, said the nine-year-old system was yet to be perfected.

He said the draft service tax Act was being studied by the experts, and the views may be firmed up soon. He also clarified that since the Union Budget exercise for 2004-05 has already started, many aspects of the service tax regime was receiving a close scrutiny.

Assuring that the department would address concerns of all assessees, he said, "The department has an open mind, wants to be fair and believes in total transparency." Pointing out that the facility of e-administration was now being offered to assessees, for both registration and filing of returns, Mr Singh said the response so far has been somewhat disappointing.

Suggesting that there was need to move ahead with the times to become fully e-enabled, he said the low service tax base was a matter of concern for the department.

Against the nearly three million recognised service providers in the country, the number of assessees was now only 2.2 lakh, he lamented. Seeking more registrations through voluntary compliance in a big way, he dispelled any fears over departmental harassments of assessees. "Our target is to achieve an assessee base of 4.5 lakh by March 2004, and we intend to achieve this through vigorous awareness programmes."

Asked if the slack in collections could have been caused by increase in rate from 5 per cent to 8 per cent, Mr Singh replied in the negative. "It is a matter of creating awareness, and that is what we intend to do now," he clarified.

Earlier, Mr Sanjay Budhia, Chairman, CII (ER), said the service sector, which now occupies the centre-stage of the economy, covered a wide range of activities such as management, banking, insurance, hospitality, administration, communication, entertainment, wholesale distribution, retailing and even R&D.

Pointing out that its share in the country's real gross domestic product has surpassed that of agriculture and industry at a relatively faster pace, he said the challenges before Government "are multi-dimensional as the levy of service tax was still in its infancy." He said there was still considerable lack of awareness about the tax and its ramifications, both on the part of the public and the trade who constitute the assessees, and also among the departmental officers who administer it. He described service tax as the tax of the future.

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