The Hindu Business Line : `Address service tax issues to avoid confusion'

PRICEWATERHOUSECOOPERS has called upon industry to address the complex issues raised by the service tax, touted as the tax of the future, while asking the Government to better define the rules and expressions in order to save industry from grappling with a lot of interpretation.

"It's going to be a critical issues for the industry. Though compliance is made voluntary, it may not be the same in the future. So, you had better go for a proactive service tax planning and management, as it can make or break your business," Mr S. Madhavan, Executive Director and Head (Indirect Tax Practice), PricewaterhouseCoopers, said.

Delivering the keynote address at the seminar on service tax on Friday, he said that taxes on services, which stood at eight per cent, might go up to 16 per cent in the coming years. "In India, we have a distinction between goods and services as against a global practice of levying a VAT on both the heads."

Stating that India can benefit from the experiences of others, Mr Madhavan said that Customs duties would come down drastically in the years to come.

Despite being a newer tax, service tax contributed Rs 10,000 crore to the Centre.

It will further spend time and energies on this, keeping in view the steep growth in the sector, which contributed 52 per cent to the GDP.

Specifically focusing on commissioning or installation services, maintenance or repair services and business auxiliary services, recently brought under the service tax net, he said that there was a need to rewrite the provisions to avoid catch-all definitions.

"Some of them are contradictory." he said, wondering whether maintenance of software was taxable and whether warranty services attracted service taxes. "The distinction between work and service blurs." Ms Sreela Ghosh, Commissioner (Service Tax) of Customs and Central Excise, said that the focus would be on widening the service tax assessee base by advocating voluntary compliance. "The facility of electronic filing will be expanded," she added, giving an overview of the service tax.

"During a decade of introduction of the tax, the collections witnessed a 10-fold growth from Rs 410 crore in 1994 to Rs 4,200 crore in 2002-03."

Mr M. Gopalakrishna, Convener (Economic Affairs Panel of CII-AP), said that extensive debate should be taken up to discuss a number of issues covering the whole gamut of service tax such as what should be taxed and to what extend.

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