Service Sector
The service sector of Indian Economy has brought much success in the recent years. It constitutes a larger share in the total Gross Domestic Product. The growth rate of services sector in India is faster than any other sectors. It constitutes more than 50 percent of the total GDP in the country.
The services sector in India has become a larger source of revenue for the country. The Government of India introduced service tax in the year 1994 and presently it constitutes a major source of revenue for the Government. Collection of Services tax in India has reached at Rs. 23,000 Crores in 2005-06 from Rs. 2072 Crores in 1999-00.
For the year 2006-07, the target is being fixed at Rs. 34,500 Crores.
From time to time Government is trying to bring more items under the service tax net. The Government announced Taxation of Services Rules 2006 and Service Tax Rules 2006. The Government has also formed a committee for reviewing the services tax circulars since 1994.
In the coming budget 2007-08, the services sector will be emphasized as a top source of revenue for the Government. The Federation of Indian Chamber of Commerce and Industry has urged that all services should come under the purview of service tax. The FICCI has also pointed out that a separate and comprehensive service tax legislation should be introduced. Apart from this, the limit of exemption for services tax registration should be Rs. 10 Lakhs in comparison to the present levels of 4 Lakhs.
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