Excise duty and service tax to be hiked - Deloitte

The Indian government is likely to increase the rates of excise duty and service tax in the budget to be presented next month to harmonise these with the proposed goods and services tax scheduled to be introduced from the next fiscal, according to a report by international accounting and consulting firm Deloitte Touche Tohmatsu.

Deloitte said it expected the government to roll back some of the 6 per cent cut in excise duty and 2 per cent cut in services tax that it had provided in three stimulus packages. The consulting firm also was expecting a reversal of some of the cuts in indirect tax made in the fiscal stimulus packages between December 2008 and February 2009.

Deloitte India senior director (indirect tax) M S Mani said that directional clarity on the GST and service tax and excise duty rates could be increased to facilitate transition to the proposed GST regime. The GST is supposed to fuse almost all indirect taxes at the centre and state levels, replacing excise duty, central service tax and VAT.

The firm also predicted that customs duty on crude oil might be pegged back to bring in fresh revenue streams for the government to rein in the mounting fiscal deficit.

More clarity on taxes expected
In its sector-wise expectations, it said clarity on applicability of service tax / VAT on software industry transactions is likely to be brought about by the government. ''The introduction of the information technology software services tax, which has been defined in a fairly expansive manner, has resulted in overlapping taxes. It is expected that some of the anomalies would be rectified," Mani said.

For the telecom sector, the removal of the special additional duty payable on import of capital equipment would be of benefit. Further, Deloitte says that a reduction in customs duty on imported equipment required for telecommunication services could be expected in view of the mandate from the telecom minister to further reduce telecom rates.

Among other sectors, some clarification is expected on the applicability of service tax on renting immovable property in light of a recent Delhi High Court decision.

Besides, it says the service tax rate under the composition scheme for works contract services, which was increased to 4 per cent from 2 per cent from 1 March 2008, continues to remain the same although the service tax has been reduced from 12 per cent to 10 per cent from 24 February this year. This needs to be corrected if the service tax rate is to be maintained at 10 per cent, he added.

Source - domain-b

Training programme by ICAI

ICAI's Diamond Jubliee conference

ICAI is celebrating its Diamond Jubilee this year and coinciding with its celebrations, the Institute would be hosting International Conference on the theme ‘Winds of Challenges – Global Strategies for Accounting Profession’ on July 3 – 5, 2009 at Hotel Jaypee Palace, Agra.

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