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Assocham submits plan for changes in service tax rules

Our Bureau

New Delhi , April 6

THE Associated Chambers of Commerce and Industry of India (Assocham) has submitted a proposal to the Finance Ministry recommending that the services of individual self-employed people where the total value of service is not in excess of Rs 10 lakh in a year be exempted from service tax.

Alternatively, the Chamber feels a flat amount of service tax under a simplified system should be charged to enterprises and individuals rendering annual service for a value not exceeding Rs 10 lakh.

A similar approach is also adopted in the case of proposed VAT under compensation scheme.

According to the Chamber, at present the service tax regulation does not have any threshold limit.

This would create hardship for small entities such as barbers, dhobis and other self-employed people where a similar activity done by large enterprises is taxable.

There should be a threshold limit for very small enterprises that earn their living expenses from such services and do not have any infrastructure to comply with the regulatory requirements.

Assocham has sought clarification with regard to whether the right given by a foreign enterprise to an Indian company on payment of royalty to access its knowledge base, trademark and technology overseas is taxable in India under service tax or not; and also whether royalty payments are taxable under service tax and if so, under what category.

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