The Hindu : Business : Effective service tax will be 6 per cent, says Government

Online edition of India's National Newspaper
Monday, Jul 12, 2004

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Business

Effective service tax will be 6 per cent, says Government

NEW DELHI, JULY 11. Justifying the two per cent hike as well as the inclusion of more areas under the service tax net, the Centre today assured India Inc. that the effective tax would be only six per cent and not 10 per cent as proposed in the Budget due to the availability of credit on manufacturing.

Asserting that the services sector, which contributes nearly 50 per cent of the gross domestic product (GDP), would have to share the burden, the Member, Central Board of Excise and Customs, S.K. Bhardwaj, said, "The service tax increase from 8 to 10 per cent is justifiable as the effective tax will be only 6 per cent since credit is also available on tax paid on goods and services."Interacting with members of the PHDCCI, Mr. Bhardwaj, who was a member of the Budget team, said that the tax base had to expand but the burden should come down.

On the Fiscal Responsibility and Budget Management Act, which envisages the reduction of the revenue deficit to 1.5 per cent of the GDP by 2008-09, he said it was possible to achieve the target. "It is challenging since the Government has to raise resources and at the same time care should also be taken not to burden honest tax payers." — PTI

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Effective service tax will be 6 per cent, says Government