The government has all the strategies to cope up the delay caused by many factors in the implementation of GST. This time the administration has come up with an idea to increase the service tax just in the case of late implementation of goods and service tax which is also likely to cross the assumed date of April 1.
The Center could consider expanding the service tax rate in the coming Budget as a reverse alternative in the event that the implementation of the Goods and Services Tax (GST) is postponed past April 1. Most services are probably going to be taxed at a higher rate of 18 per cent under GST against the present rate of 15 percent. This was a piece of the four-level rate structure endorsed by the GST Council at its meeting on November 3 and the other rates decided under GST are 5 per cent, 12 per cent and 28 per cent. The authority, be that as it may, said there is no solid proposition on the issue and decision regarding it.
The choice will, in any case, be taken later in the month and nearer to the presentation of the Union Budget on February 1. Financial plan 2016-17 climbed the service tax rate to 15 percent with the presentation of the Krishi Kalyan Cess at the rate of 0.5 per cent on every single taxable service.
An internal official mentioned the issue in his own words, “There is some thinking of an increase in the service tax rate in case the GST is not implemented from April. A higher rate will help improve revenue and also bring it closer to the proposed standard rate under GST, It has to be closely examined at the highest level before it is announced. On the other hand, there is a case to be made that the indirect tax structure should not be tweaked for just a few months before the GST rollout.”
“It is a tight schedule, but it is still very much doable. Much will depend on the January 16 meeting of the GST Council,” he added. While Pratik Jain, Partner and Leader Indirect Tax, PwC India mentioned that, “Since the rate of taxation of services under GST will be close to 18 percent, there is a possibility of an increase in the service tax rate.”
