Central Board of Excise and Customs (CBEC) chairman Sumit Dutt Majumdar, who has been given an extension till he superannuates in October 2011, says thrust of the Budget is to boost growth in manufacturing, besides creating agriculture infrastructure. He tells TOI in an interview that service tax in hospitals and diagnostic tests is not new, and was always charged through insurance. Now a patient will be directly charged the service tax. Excerpts :
Budget has not changed duties...
Through this Budget, the finance minister has given a clear signal for introduction of the Goods and Services Tax (GST) as soon as possible. The intention is to make it broad-based to spur growth. The signal has been given by not hiking excise duty, keeping both goods and services tax at 10% since maximum growth in indirect tax revenue is expected from there.
But excise stimulus is continuing...
Inflation was the primary reason behind not withdrawing excise stimulus completely as this would have added to the galloping commodity and food prices. Besides, the extra business profit would also translate into growth in investment and that would result in creation of more employment. If all goes well, high growth in the economy would lead to more taxes.
But you have brought lot of services under tax net that would directly affect the poor and the middle class?
We have made a fine distinction to ensure that the poor doesn't get affected, while bringing certain services under the tax net. For instance, in legal services if a lawyer represents an individual in a case, it will not attract service tax. But if a solicitor firm represents a corporate house, service tax will be charged.
But what about hospital stay and diagnostic services?
In case of hospital stay, service tax was always charged through health insurance. Changes have been made because insurance companies had been avoiding it by asking patient to seek reimbursement after he has paid the bill. Most of the diagnostic services were part of the hospital bills.
Is there any scope for reconsideration?
It is for the government whether to put it in negative list along with food items. But as per the GST structure, all services have do be brought under the new tax structure. We are gradually aligning to GST. In this Budget, we removed 130 items from the exempted list and put 1% duty on them as we have played safe, not to add to the inflationary pressure. They may attract more duty with the GST coming into practice.
Duties were lowered in 2008 when international crude went up to $147, any such scope now?
That again is a decision to be taken by the government, how and in what manner. But as we move towards GST, we will rationalize the tax administration and do procedural reforms. Our aim is to bring customs duties to Asean peak level, average of which is 6%-7%.
toi
Budget has not changed duties...
Through this Budget, the finance minister has given a clear signal for introduction of the Goods and Services Tax (GST) as soon as possible. The intention is to make it broad-based to spur growth. The signal has been given by not hiking excise duty, keeping both goods and services tax at 10% since maximum growth in indirect tax revenue is expected from there.
But excise stimulus is continuing...
Inflation was the primary reason behind not withdrawing excise stimulus completely as this would have added to the galloping commodity and food prices. Besides, the extra business profit would also translate into growth in investment and that would result in creation of more employment. If all goes well, high growth in the economy would lead to more taxes.
But you have brought lot of services under tax net that would directly affect the poor and the middle class?
We have made a fine distinction to ensure that the poor doesn't get affected, while bringing certain services under the tax net. For instance, in legal services if a lawyer represents an individual in a case, it will not attract service tax. But if a solicitor firm represents a corporate house, service tax will be charged.
But what about hospital stay and diagnostic services?
In case of hospital stay, service tax was always charged through health insurance. Changes have been made because insurance companies had been avoiding it by asking patient to seek reimbursement after he has paid the bill. Most of the diagnostic services were part of the hospital bills.
Is there any scope for reconsideration?
It is for the government whether to put it in negative list along with food items. But as per the GST structure, all services have do be brought under the new tax structure. We are gradually aligning to GST. In this Budget, we removed 130 items from the exempted list and put 1% duty on them as we have played safe, not to add to the inflationary pressure. They may attract more duty with the GST coming into practice.
Duties were lowered in 2008 when international crude went up to $147, any such scope now?
That again is a decision to be taken by the government, how and in what manner. But as we move towards GST, we will rationalize the tax administration and do procedural reforms. Our aim is to bring customs duties to Asean peak level, average of which is 6%-7%.
toi
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