Chidambaram wiens service tax net
Having noted that service sector contributed as much as 54% of the GDP, FM proposed to raise service tax rate from 10% to 12%.india Updated: Feb 28, 2006 16:06 IST
Having noted that service sector contributed as much as 54 per cent of the GDP, Finance Minister P Chidambaram on Tuesday proposed to raise service tax rate from 10 to 12 per cent and widen the net to double the collections to Rs 34,500 crore in 2006-07.
During 2005-06, government is likely to collect Rs 23,000 crore (revised estimates) against the budget estimate of Rs 17,500 crore.
The increased service tax rate would be applicable from the date of enactment of Finance Bill 2006, he said in his Budget 2006-07 presentation.
The minister has brought 15 new services in the net and new areas include share transfer agents, registrars, ATMs, sale of space for advertisement other than in print media, sponsorship of events other than sports, international air travel other than economy class, public relation (PR) services and internet telephony, among others.
Credit card, debit card and other payment card related services have been brought under the service tax net.
The minister has also withdrawn exemption from service tax to six services including call centre, re-insurance premium received from both domestic and overseas and others. This would come into effect from Wednesday.
Chidambaram exempted all taxable services provided by Reserve Bank of India from service tax liability.