Indian Government raises Service tax to 12%

Indian Government raises Service tax to 12%

There is huge disappointment in store for the people coming under the Service Taxation structure. The Indian government has decided to raise this tax to 12% from the upcoming financial year.

The finance ministry apparently decided to take this step after noticing that the taxes from this sector added up to almost 54 per cent of the GDP. They have also widened up the net with the aim of doubling the collections to Rs 34,500 crore in 2006-07.

The Indian government is expected to collect Rs 23,000 crore (revised estimates) against the budget estimate of Rs 17,500 crores in the current year through these taxes. Some of the new services now coming under the service tax bracket 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.

In addition, credit card, debit card and other payment card-related services have been brought under the service tax net. This is going to disappoint a lot of people involved in these services related industries.