The Hindu Business Line : Service tax audit now extended to all taxable services

THE Finance Ministry has extended the scope of service tax audit to all the 58-odd services for which the service tax is currently levied. Until now, only a few services such as telephone, general insurance and stock broking services came under the ambit of service tax audit.

The latest move of the revenue department is aimed at improving compliance with the provisions on service tax under the Finance Act, 1994. It could also help the Government in mobilising additional revenues on this account. The Central Board of Excise and Customs (CBEC), which is administering the service tax provisions, had recently initiated a nationwide survey to educate service providers and also widen the service tax net.

"Although the scope of service tax audit has now been extended to all the taxable services, it is not that we would bring every service provider under audit. We will select assesses in a systematic manner and the audit will be subject to the procedures and guidelines prescribed in the Service Tax Audit manual," a top Finance Ministry official told Business Line here.

The CBEC had come up with a comprehensive Service Tax Audit manual in September 2003. The manual provides detailed guidelines on the audit of service tax assesses.

Service tax mop up in the first nine months of the current fiscal surged by 68.19 per cent to touch a level of Rs 5,089.87 crore against Rs 3,026.24 crore mobilised in April-December 2003.

The increasing contribution of services sector in the gross domestic product had prompted the Finance Ministry to revise the estimates for service tax for the current fiscal to Rs 8,300 crore. A large chunk of thisis expected to come from telephones (Rs 3,024 crore), insurance (Rs 1,044 crore), and brokerage services (Rs 378 crore).

The Government had budgeted receipts of Rs 8,000 crore from service tax for 2003-04 (Rs 5,000 crore for 2002-03).

For the ensuing fiscal, the Ministry has targeted Rs 13,500 crore from service tax. A sum of Rs 4,968 crore is expected during 2004-05 from telephone services alone.