Wider service tax net is necessary: Excise chief

The gap between people registered under Service Tax and those paying taxes is wide, said Mr J.P. Gregory, Chief Commissioner Central Excise and Custom, Bangalore.

Speaking at the seminar on service tax organised by Assocham, Mr Gregory said: “There are 90,000 people registered under Service Tax in Bangalore, but only one-third are paying taxes. This gap needs to be covered and the department is initiating numerous measures.

“Service tax is envisaged as the tax of the future. This would bring in VAT in its truest sense, though the ultimate objective is to usher in the regime of Goods and Service Tax (GST).”

Voluntary tax compliance demands prudent accounting practices and transparency in the conduct of business.

“Marginal rates of taxation will be conducive in this process. Many new services may be brought under the tax net in future. The inclusion of all value added services in the tax net would yield larger amount of revenue and make the tax structure more elastic,” explained Mr Gregory.

Advanced economies in Western Europe, North America and Far East have a share of service sector in their GDP, ranging from 60 per cent to 80 per cent. The growth in absolute quantum of GDP and proportion of service-sector in GDP holds promise for larger revenue generation without increasing the level of taxation.

Talking about measures initiated by the department to achieve target (Budget estimate) of Rs 82,000 crore service tax collections for 2011-12, Mr Gregory said, “We plan to intensify the field survey operations to ensure that all taxable service assessees are brought into the tax net and Service Tax due from them are collected without hitch.”

While the basic tenet of voluntary compliance of Service Tax law has to be adhered to, habitual evaders of Service Tax have to be booked. There could be no leniency in this regard, he added.

Effectively implement an electronic tax administration system for service tax so that service tax could be administered as an e-tax of the country. “The Directorate General of Systems and Data Management has developed web-based software named ACES which automates various processes of Central Excise and Service Tax for assesses and the department and gives complete end-to-end solution. The industry should make best use of this.”

With the launch of Automation of Central Excise and Service Tax greater emphasis will be on training the staff to carry out effective, systematic and result oriented analysis of data in the system, he added.