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Rediff News  All News  » Business » Banking services under service tax scanner

Banking services under service tax scanner

June 03, 2008 12:37 IST
The Central Board of Excise and Customs (CBEC) has started tightening the noose around tax evaders.

This year, the department intends to profile banking and financial services, port services and business auxiliary services to pinpoint taxability of various components to enforce compliance. More services will be profiled in subsequent years.

Besides, the department is also strengthening audit for picking up more cases where credit claims are unusually high. It also intends to encourage e-filing of service tax returns.

Recently, the department had detected tax evasion by commercial airlines, which were making payments to ticketing solution providers based overseas. "There is a severe problem of lower collection of service tax at many places due to lack of awareness among officers and taxpayers," said a source. To address this issue, a special refresher course is being organised for service tax officers.

Service tax collections grew by over 34 per cent in 2007-08 and are projected to grow 27 per cent to Rs 64,460 crore (Rs 644.60 billion) in 2008-09.

However, finance ministry officials said collections could grow at a much faster pace if evasion was checked.

The CBEC is also planning to divert excess staff from the central excise to the service tax wing. Central excise collections are falling short of the target year after year and the department is now focusing on service tax, which may become the largest component of indirect taxes in four to five years.

It has also decided to study service tax collection trends category-wise and open suspect cases for scrutiny.

To deal with issues like tax collections not deposited with the exchequer, the department will collect data from government departments and public sector undertakings.

The department has also launched a computerisation drive to replace the age-old systems and network all offices for better taxpayer services. There are about 1.05 million registered service tax payers, of which nearly 50 per cent are active.

Prashant K Sahu in New Delhi