SERVICE TAX EXEMPTION FOR GOODS CARRIAGE TO GTA

Thesynergyonline Economic Bureau

NEW DELHI, JULY 12 :
THE CENTRAL Government has issued Notification No. 29/2008-Service Tax, dated 26-6-2008 to exempt fully from levy of service tax on supply of transport vehicles (goods carriage) to a goods transport agency (GTA) to be used for transport of goods by road [section 65(105)(zzzz)) of the Finance Act, 1994].

Representations have been received from the All India Confederation of Goods Vehicle Owners. Associations and also from the All India Motor Transport Congress requesting to provide relief on account of levy of service tax on supply of goods carriage to GTA for use in transport of goods. It has been stated that GTAs often provide services in relation to transportation of goods by road using the goods carriage obtained on rent or hire basis.

The relief has been sought on various grounds inter alia that the service tax paid on renting/hiring of goods carriage, without right of possession and effective control, could not be taken as input credit for payment of service tax towards GTA service.

Services provided by a GTA in relation to transportation of goods is leviable to service tax under GTA service [section 65(105)(zzp)]. Service tax for the GTA service provided is payable only on 25 per cent of the amount charged for providing the GTA service and the balance amount is exempt from levy of service tax.

In view of this provision, GTAs are not entitled to take input credit under Cenvat Credit Scheme on goods and services used for GTA service. Moreover service tax for GTA services provided in seven specified cases is not required to be paid by the GTA service provider but by the person making payment towards the freight.

In this year's budget, services provided in relation to supply of tangible goods for use, without transfer of possession and effective control, has been made as separate taxable service and this service has come into force with effect from 16-5-2008.

Consequently, supply of goods carriage to the GTA, without transfer of possession and effective control, for using the said goods carriage for transport of goods by road becomes leviable to service tax.

Notification No. 29/2008-Service Tax, dated 26-6-2008 exempts fully the levy of service tax on supply of goods carriage to GTA for use in transportation of goods by road.(npsinha@thesynergyonline.com)

GOVT. WILL TAKE SERIOUS ACTION AGAINST WILLFUL SERVICE TAX EVADERS

Thesynergyonline News Service

NEW DELHI, JULY 28 : THE Government was very keen in resolving the areas of ambiguities to increase the share of services from 1.1% of GDP said, Mr. P C Jha, Member, CBEC, and also strongly cautioned the willful service tax evaders for serious consequences.

Inaugurating The Associated Chambers of Commerce and Industry of India (ASSOCHAM) Conference on Service Tax and CENVAT here today, Mr. Jha said that the government was finalising the two Masters circulars on technical and procedural issues and shall be issued on 3rd week of August.

Mr. Jha further said that though the service tax collection during 2007-08 was expected to be Rs.50,200 crore as against Rs.37,500 crore in last year, the potential were very high and therefore the revenue department will take serious action against those also are deliberating violating the law.

He informed that the government has already set up large taxpayer units covering central excise, service tax and income-tax in Bangalore and Chennai and will be following soon in Delhi and Mumbai would be set up by December 2007.

The government is receiving feedback from industry and chambers circles and after studying the same will finaliase the master circulars. This he assured will remove many of the existing irritants and uncertainties and make procedures easy to understand and follow.

He agreed that there is a need for better understanding and implementation of the service tax provisions by the field administration, while urging the service tax paying community to pay the tax due in accordance with law.

Mr. Jha took note of trade and industry’s grievance that there is inordinate delay in disposal of adjudication processing particularly of Show cause notice leading to uncertainty and assured that the government will take steps to ensure faster adjudication of service tax cases and also for providing a judicious discipline at the field levels.

Reacting to the complaints that summons are being issued calling for records by some field formation despite the board’s directions against such practices, he assured that the government will take serious note and rectify the situation.

Mr. R Sekar, Joint Secretary (TRU), CBEC cleared doubts in many areas likes works contract, rental in immovable properties, mining, sub-contractor & main contractor, telecom, SEZs where hardships are being faced.

Mr. T R Rustagi, Chairman, Committee on Service Tax Circulars said that service tax being a new area and very complex tax system dealing with whole range of services and thus created some problems and hardships. There has to be a meeting point and agreements between tax policy makers, implementers and the taxpaying community. While the service tax design structure and law has been reasonably evolved, their still a lot to be done to make the tax administration especially at the field levels so as to make it effective and efficient tax administering system.

Mr. Anil K Agarwal, ASSOCHAM Immediate Past President in his address said that the CENVAT Credit could not be availed on the service tax paid on the outward transport because the credit covers duty paid on input materials as well as tax paid on services, used in or in relation to the manufacture of the final product.

Mr. J K Mittal, Co Chairman, ASSOCHAM Committee on Indirect Taxes said that the time limit for adjudication of cases should be prescribed which should be one from the date of issue of Show Cause Notice and those could not be disposed of within such time. The reason should be informed to the assessee, said Mr. Mittal.

SERVICE TAX TO GROW BY 257% BY 2010 , SAYS ASSOCHAM

Thesynergyonline News Service

NEW DELHI, JUNE 18 : TOTAL tax revenue from corporate, income-tax, custom & excise duties and service taxes is poised to rise to Rs. 5,80,816 crore by 2009-10 and subsequently touch whooping volumes of Rs.10,69,486 crore by 2014-15 from Rs. 46,7848 crore in fiscal 2006-07, according to The Associated Chambers of Commerce & Industry of India (ASSOCHAM).

The growth in total tax collections would increase mainly on account of higher collections of corporate and service taxes as also partly in income tax, customs and excise duty, says ASSOCHAM Eco Pulse on Tax Revenue : The Future Growth Path.

Releasing the Eco Pulse, ASSOCHAM President, Mr. Venugopal N. Dhoot said that service tax which was imposed since 1994 with three services in its net, registered a growth of 9200% between 1994 to 2006-07. However, in 2006-07, the service tax was imposed on 106 services. In 2006–07, the total revenue earned through service tax was Rs.38169 Crores which will go up to Rs. 1,36,392 Crores and register a growth of 257% in 2009-10. In 2014-15, the service tax revenue is likely to touch Rs.7,35,075 Crores with percentage growth of 1825.

In the meanwhile, ASSOCHAM Eco Pulse points out that growth in corporate, income-tax, excise & custom duties volumes have respectively risen from a whooping level of 1549%, 946%, 280% and 244% immediately after liberalisation in 1992-93 to 2006-07, showing that tax compliance increased in the period as a result of partial simplification in tax administration and increased economic activities that motivated taxpayers to avoid tax evasion which was so rampant during days of isolated economy.

The ABB points out that while the central government collected corporate tax to the tune of Rs.8899 crore in 1992-93, the same rose to Rs.14649 crore in 2006-07 an increase of a little over 1549%. In fiscal 2006-07, share of corporate tax in total tax revenue went up to 31.3% which was 11.9%, way back in 1992-93. The corporate tax collection would further go up to Rs.204784 Crores in 2009-10 before settling to Rs.521630 Crores by 2014-15.

As regards to income-tax, in 1992-93 the revenue collected by government was Rs.7888 crore which went up to Rs.82510 crore in 2006-07, showing a growth volume of 946%. This has happened largely due to better tax compliance and increased number of taxpayers and much lessor harassment from authorities concerned. The share of income tax in total tax revenue while was 10.6% in 1992-93, it went up to 17.6% in fiscal 2006-07. Projections for Income Tax collections for 2009-10 are made for Rs.119443 Crores and Rs.259522 Crores for 2014-15.

Excise and custom duty, the volumes for tax collections have risen respectively by 280% and 244% despite rationalisation and reduction in their duty structure which motivated large number of taxpayers to voluntarily show transparency in their accounts books. As a result of which, the tax collection has gone up. The revenue from customs to the government in 1992-93 was Rs.23776 crore and in case of excise, it was Rs.30382 crore, the collections from these two sources respectively went up to Rs.81800 crore and Rs.117266 crore showing an increase of 280% and 244%, reveal the ASSOCHAM Eco Pulse. Excise and Customs collections respectively projected for 2009-10 comprise Rs.152874 Crores and Rs.87899 Crores against Rs.735075 Crores and Rs.126810 Crores for year 2014-15.

The excise duty share in total tax revenue while was 41.3% in 1992-93, it declined to 25.1% in 2006-07 and as regards to customs duty share in total tax revenue which was 31.9% in 1992-93 fell down to 17.5% in 2006-07, as a result of massive structuring on excise and customs. The volume revenue increased exponentially because of increased economic activities and substantial growth in the number of industrial units.