The Hindu : Business : Move to widen service tax net criticised

Online edition of India's National Newspaper
Saturday, Mar 11, 2006

Business

Business

Move to widen service tax net criticised

Staff Reporter

CAs say that budget proposals contain complex provisions

BRAINSTORMING: Senior chartered accountant Venugopal C. Govind addressing the one-day seminar on Union Budget 2006 organised by the Institute of Chartered Accountants of India in Kochi on Friday. — Photo:VipinChandran

KOCHI: The Union budget is aimed at ensuring an unhindered process for growth. And one of the thrust areas is infrastructure growth, said S.S.N. Moorthy, Chief Commissioner of Income Tax, here on Friday.

He was inaugurating a seminar on Union budget - 2006, organised by the Ernakulam branch of the South India Regional Council (SIRC) of the Institute of Chartered Accountants of India (ICAI).

As life has become more complex with the emergence of various sectors, taxation has also become an elaborate process. Though the intention behind taxation on several sectors may be good, some problems may crop up at the implementation stage. In this context, he cited the budget proposals for introducing tax reforms in the cooperative banking sector and charitable societies.

Indian tax consultants will be of great demand in future as the country's economy gets integrated with the South Asian and other economies of the world, said Venugopal C. Govind, Chartered Accountant. He felt the need for core financial professionals to handle the Finance portfolio.

In a technical session, K.S. Ravi Shankar, advocate, explained the implications of the proposals on indirect tax. The move to widen the service tax net came in for his sharp criticism. Several clauses pertaining to service tax lack intellectual insight. He said there were inbuilt flaws in the clauses pertaining to import. The proposal to do away with the right to abandon consignments cannot be justified, according to him.

A trial and error method is presumably being adopted to draft the service tax provisions, he said. These contained controversial definitions which would make the job of assessment much more complicated.

Vinod K. Singhania, Chartered Accountant, dealt at length on the various clauses of the proposals on direct tax.

Babu Abraham Kallivayalil, secretary of SIRC of ICAI, voiced concern over the service tax implications on the CAs' services. K.B. Venu and George Lazar, chairman and secretary respectively of the Ernakulam branch of the SIRC, spoke.

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