FICCI's National Committee on Infrastructure for change in Service Tax Collection regime

Ficci's National Committee on Infrastructure has written to the Union Finance Minister Arun Jaitley to have a re-look at its service tax collection regime for Infrastructure consultant and restore the earlier point of taxation including service tax to be paid within a specified time after receipt of payment from Service Receiver and charging of Service Tax via TDS route, where the Client (Service Receiver) deducts the Service Tax payable from the Bills of the Service Provider and deposits the same with the authorities against the Service Tax account of the Service provider.

"We also request the Union Finance Minister to charge Infrastructure consultants Service Tax via Tax Deduction at Source (TDS) mode. This would mean that when a Client makes payment to the Consultants for their services, he simultaneously deposits the Service Tax amount with the Service Tax Authorities against the Service Tax account of the Consultants. Regarding the accounting of CENVAT credit the refund can be claimed on same basis as in case of Refund of Income Tax on reconciliation. This mechanism would solve the entire problem, wherein, the Government will be able to collect its revenue faster, than it does at present and ensure full compliance. Besides the Service Tax Payers will heave a sigh of relief." Said Mr K .K. Kapila, co chairman, FICCI Infrastructure Committee.

"The Government funded infrastructure projects is impeded by discrimination against the Consulting Engineering Companies by levy of Service Tax. The Consulting Engineering Companies provide services relating to Survey, Investigation, Design, Detailed Project Report & also Supervision for implementation of such infrastructure projects. This critical issue originated with the introduction of Point of Taxation Rules 2011 & subsequent amendment in Finance Act 2012. The anomaly & discrimination in implementation of GST for Consulting Engineering Companies providing services for Government funded infrastructure projects" said Mr Kapila.

"As against the earlier provisions of paying Service Tax within 30 days of receipt of payment, the Consultants are being forced to pay Service Tax within 30 days of issuance of invoice itself, even if the invoices remain unpaid for months. Delayed payment of Service Tax further attracts huge interest @ 18%. The notification is thus highly discriminatory, prejudiced and unjust to the Consultants." Mr Kapila said.

"The above shall go a long way to tide over problems of payment of Service Tax to the authorities, and also relieve the unwarranted financial burden on service providers to a great extent. This in turn will also help the Government to collect revenues, encourage defaulters to comply and ensure full compliance and ultimately promote the service sector to further grow and serve the growing demands of the economy." Said Mr Kapila.

Source : Equity Bulls

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