Service sector to yield more revenue

Contribution of the service sector in the GDP is 56 per cent but the share of the service tax in the GDP is just 1.1 per cent, Chairman of Central Board of Excise and Customs (CBEC), P C Jha, said here last night.

Jha said the service tax revenue is growing at a rapid pace, in 1994, service tax was imposed on three services and the rate of duty then was five per cent, with service tax revenue at Rs 410 crore with 3900 service tax payers. Now, 106 services come under tax and the rate of tax has gone up to 12.36 per cent.

The number of service tax players in the country now has gone up to 5.5 lakh and the service tax collection in 2007-08 was 51,113 crore. In spite of this rapid growth, the contribution of service tax to the GDP is only 1.1 per cent.

For the current year, the target for collection of service tax is Rs 64,460 crore, he said, adding, the department’s expectation is that it would be exceeded.