The Hindu Business Line : CBEC rules out service tax rate cut for now

The Central Board of Excise and Customs (CBEC) has ruled out any reduction in the 12 per cent service tax rate for now. This is even as trade and industry pitched for a service tax rate reduction similar to the 4 percentage point cut in Cenvat duty announced on December 7.

“It will be difficult for me to agree to any reduction in service tax rate now,” Mr P.C. Jha, CBEC Chairman, told members of the PHD Chamber of Commerce and Industry (PHDCCI) here today.

He highlighted that the total negative impact (indirect tax revenue foregone) for the Government on account of the post-budget duty changes stood at Rs 40,475 crore.

This included revenue foregone of Rs 22,600 crore arising from the duty changes made in petrol and diesel in June.

Later, when asked whether he was confident of meeting the budget estimates of Rs 3,20,000 crore for indirect taxes in 2008-09, Mr Jha told reporters that “the department would make every effort to collect taxes as per the law and the rates specified”.

PHDCCI members submitted that the Government should have along with the cenvat duty changes reduced the service tax rate to 10 per cent.

It was pointed out that companies entering into composite turnkey contracts had to bear 10 per cent excise duty and also a 12 per cent tax on services, increasing the overall incidence of taxation.

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