Challenges before the Service Tax Administration in India
Service tax administration in India has before it multi-dimensional challenges.
Some of them are related to the very nature and growth of service sector in the
economy and others relate to procedural aspects of the service tax collection.
The growth of service sector at a high rate offers opportunities as well as
challenges to bring under the tax net hitherto uncovered services. This offers
tremendous revenue potential to the Government. It is expected that in due
course Service Tax would reduce the tax burden on international trade (Customs
duty) and domestic manufacturing sector (Excise duty). So a planned growth of
service tax would be commensurate with the goals of economic liberalization and
globalization. This process requires levy of taxes on new services without
substantial rise in the rate or cost of collection.
The proposed Goods and Service Tax is a part
of the tax reforms that centre around evolving an
efficient and harmonized consumption tax system in the country. Presently, there are parallel systems of indirect
taxation at the Central and State level.
The existing Service Tax System poses an imminent challenge, to reform
its synergies, to eventually harmonize itself in the GST regime, as and when it
is rolled out. Successful integration of
goods and service tax, would give India a world-class
tax system and will bring in improved tax collection. In a way, it will boost our economy and
enable us to compete at the global front.
As a result, our system will eventually match the international standard
in the sphere of indirect taxation. It
will also end the long standing distortions of differential treatments to the
manufacturing and service sectors. The
effort to prepare for a smooth integration with the GST without any hardship to
public is a big challenge, that need to be handled at
the field as well policy level.
No
doubt, the twin goal of revenue maximization and introduction of the culture of
voluntary tax compliance also throw up major challenge before the service tax
administration in the country. The Department has taken several steps to
upgrade the skill of the officers handling Service Tax and equip them with
necessary expertise. Training programmes on the issues related to Service Tax are
regularly conducted for the Departmental officers. A Manual for scrutiny of Service Tax Returns
has been prepared by the CBEC to enable the Departmental officers to carry out
the scrutiny of Service Tax returns in a methodical and systematic manner. At the same time, the Govt. has also taken
several facilitation measures for the tax payers. To assist them in the filing
of Service Tax returns, Service Tax Returns Preparer (STRP) Scheme has been
launched in 2009. To enable them to
understand the basic issues related to Service Tax, a booklet on Frequently
Asked Questions (FAQ) on Service Tax has been published and the FAQ has also
been put up on the Departmental website.
Open House sessions, Seminars etc. are also organized by the field
formations to help the assesses and solve their
problems.
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