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Friday, Jul 09, 2004

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Industry & Economy - Taxation

More services annexed at a higher rate

K. Vaitheeswaran

THE revised Budget estimates for 2003-2004 indicate service tax collections at Rs 8,300 crore against the Budget estimate of Rs 8,000 crore. For 2004-2005, the Finance Minister has projected service tax collections at Rs 14,150 crore. New services are expected to yield Rs 3,990 crore and education cess on services, Rs 150 crore.

Service tax rates

At a time where organised service providers are finding it extremely difficult to recover 8 per cent service tax from customers, the rates have been hiked to 10 per cent. The increased rates shall come into force from the date the Finance Act receives the President's assent. Education cess at 2 per cent on service tax shall also come into force from the said date.

Exemptions withdrawn

Exemption notifications in respect of safe-deposit locker services, vault services, and so on, provided by a security agency, broadcasting services provided by a cable TV operator stand withdrawn w.e.f., July 9, 2004. The exemption, which was available in respect of services provided by any person in relation to maintenance or repair of computers, computer systems or computer peripherals, also stands withdrawn w.e.f. July 9.

Exemption in respect of commission agents provided by Notification 13/2003 is confined to commission agents in relation to sale or purchase of agricultural produce w.e.f. July 9. Originally, commission agents in respect of all goods were exempted.

(The author is a Chennai-based advocate.)

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