Service tax hurdle comes in way of parking lots in south

  • Ritam Halder, Hindustan Times, New Delhi
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  • Updated: Jul 08, 2013 23:53 IST

Around 39 parking lots under the South Delhi Municipal Corporation, which were supposed to add Rs 1.14 crore to the civic body’s coffers every month, are in a mess, thanks to the service tax woes.

Even though tendering for the parking lots was completed three months ago, the hand over process is still awaited due to one crucial reason — who will pay the service tax. According to a senior corporation official, tender documents state that parking contractors are supposed to pay taxes.

“The tender document makes sure that an undertaking is given and under the 50th clause, all statutory taxes are supposed to be paid by the contractors. Also, under duties and responsibilities, which is Annexure 5, it is clearly stated that the parking contractor has to bear all statutory tax compliances. Then why should the corporation bear the burden?” the official told Hindustan Times.

The official added that the civic body had earlier received a revenue of Rs 52 lakh per month from these 39 sites which were supposed to touch R1.14 crore, a jump of over 120% after the tendering process.

However, owing to the issue of service tax , under which 12.36% has been demanded by the service tax department, there has been a delay in handing over of the letter of intent and instead of getting Rs 62 lakh extra every month, the civic body is losing Rs 1.14 crore.

“This is resulting in the matter getting stuck and the corporation losing crores of rupees. The handover should be done immediately and the service tax issue sorted out later,” the official said.

The South Delhi Municipal Corporation has 73 parking sites under its jurisdiction and officials claimed demand has been made for 13 more sites from the DDA.


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