Govt sees Rs 1,060 bn from Service Tax by FY09
Friday, May 13 2005 19:33 Hrs (IST) - World Time - 
New Delhi:
Finance Ministry today (May 13, 2005) set an ambitious target of increasing Service Tax collection to Rs 1,060 billion in four years and ultimately move towards a single Goods & Services Tax.
"We have to target Service Tax collection of Rs 1,060 billion by 2008-09 to achieve the Fiscal Responsibility and Budget Management target (of wiping out revenue deficit)," Gautam Ray, joint secretary in Finance Ministry, said at the CII national conference on Service Tax in New Delhi.
FRBM Act mandates Government to cut fiscal deficit by at least 0.3 per cent of GDP and revenue deficit by 0.5 per cent annually. In order to attain this target, Government has to raise its revenues significantly, mainly from Service Tax.
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NIPFP director Govinda Rao asked the Centre to bring all services, barring a few, under the tax net with a threshold limit of Rs 1 million in turnover.
The Government is unable to extend the list of services under taxation mainly due to administrative hassles in classifying all the service categories.
This practical problem could be overcome by announcing a negative list of services and bringing all others into the tax net, Rao said.
"It is our ultimate goal to move towards a single Goods & Services Tax," said R Sekar, a joint secretary in the Ministry.
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In his budget for 2004-05, Finance Minister P Chidambaram had made a move towards this by allowing excise duties to be rebateable against service tax and vice-versa.
The move towards GST was also recommended by Kelkar Task Force on tax reforms. It also proposed integration of GST with the state-level VAT to create a national VAT.
PTI
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