The Central Board of Revenue (CBR) has decided to impose central excise duty (CED) in value-added tax (VAT) mode on services provided by the leasing companies, banking companies, non-banking financial institutions and financial institutions in the Budget 2005-06. Sources told Business Recorder here on Thursday that these services would be brought under the tax net to meet two objectives. First, to broaden its base and secondly to enhance revenue from the service providers. The CBR has drafted proposal to explore better avenues for bringing financial services into the tax net, maintaining the existing rhythm of revenue collection in the next fiscal.
The sources said that the CBR would give concessions to business community, including tariff rationalisation and reduction in tax rates in the budget, which is necessary for increasing investment in the country. At the same time, the CBR is focusing on the services sector to expand the tax net and increase the number of filers of sales tax returns from the next fiscal.
The tax authorities are also looking for possible areas for enhancing revenue collection in future to continue the existing positive trend of surpassing revenue targets.
The CBR has, in principle, agreed to bring banking companies, leasing companies, financial institutions and non-banking financial institutions into the tax net.
The CBR is empowered to impose Central Excise Duty in VAT mode on service providers under excise laws. In the past, the department had imposed CED in VAT mode on services like shipping agents, advertisements on cable television, CCTV, telecommunication services and domestic travel by air and train.
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