More Burden Get ready to pay more service tax in 2011

More Burden

Get ready to pay more service tax in 2011

Govt To Bring All Services Under Tax Net

TIMES NEWS NETWORK

New Delhi: Trinamool Congress chief and railway minister may be fussing over imposition of service tax on rail freight on non-essential commodities but by next year, the government has plans to bring all services, including passenger fare and all freight under the tax net.
    Not just the Railways, the revenue department is looking at services ^ which constitutes 60% of GDP at current costs ^ as a major source of revenue in the future once the unified Goods and Services Tax is implemented, likely from the start of next financial year. A senior finance ministry official said barring certain services like primary health, education, government services and sovereign functions such as defence and security, all other services will be brought under the service tax net.
    In the Budget for 2010-11, the government brought domestic air travel, movies, IPL cricket, beauty pageants and lotteries under the service tax net. Each of them, according to preliminary estimates made by the Central Board of Excise and Customs (CBEC), is likely to fetch upwards of Rs 100 crore, barring air fares that is estimated to net Rs 500 crore a year. Income on account of service tax on rail freight is likely to get the government around Rs 800 crore. The total incremental gain due to broadening of the service tax base this year is estimated to be Rs 3,000 crore.
    However, service tax on railways this year has been limited to freight of non-essential items. This means prices of mass-consumable goods such as soaps, shampoos and electronic goods are likely to go up.
    Health check-up being paid for by employers, additional services provided by a builder to prospective buyers such as preferential location or external or internal development of complexes on extra charges, clubhouse, ACs or park-facing locations are in the tax net. Service of promoting a brand of goods, events like beauty pageants, business entity, etc; promotion or organizing of games including lottery is being introduced as a separate service this year. Domestic air passenger service has been included and international journeys in any class. All coaching classes will be taxed too.
    Similarly, sports sponsorships has been included, while national sports federations will continue to get exemptions.