Eight new services under tax net at 10%

Retaining the stimulus rate of service tax at 10 per cent, the Union government on Friday sought to widen the revenue base by bringing eight new services, including brand promotion, under the net and expanded the ambit of some of the services to garner Rs. 68,000 crore during 2010-11.

In effect, it will be Rs.10,000 crore more than the Rs. 58,000 crore mopped up this fiscal, as per the revised estimates.

Explaining the rationale for the changes, Finance Minister Pranab Mukherjee said that while the service sector contributed 60 per cent of the gross domestic product (GDP), its tax to GDP ratio was only 1 per cent, so there was significant potential to augment revenue. He had two options: raising the tax rate to the pre-stimulus levy of 12 per cent or bringing all services under the net.