Impact of Service Tax on the Public life of India

In 1990s, Govt of India felt that the usual Income from Customs, Central Excise & Income Tax etc is not enough. Some more Revenue is required. The Customs Duty could not be hiked. It is internally linked. The Central Excise Duty could not be increased as price of goods will increase which will make people unhappy. Income Tax is mainly evaded by big people and makes life of salaried person miserable. So, the next option was to tax the service sector which was increasing in India. It was roughly 60% of Gross Development Growth in India.

So, Govt of India sent Dr Raja Chelliah, a prominent economist of Chennai to America and study the tax pattern of the developed country. Dr Raja Chelliah recommended for introduction of Service Tax. Service Tax @ 5% was imposed and in the initial years, it brought Rs 500 crore (appx) for the Govt of India. Govt. Being encouraged, the Union Govt brought several services year after year. The entire citizen of our Country & legal persons except the State of Jammu & Kasmir were required to pay Service Tax from zero point as there was no exemption.

Exemption was granted in 1.3.2005 by virtue of notification no 6/2005 dtd 1.3.2005. The Service providers providing the value of Rs 4 lakhs were given this facility. Later on, it was increased to Rs 8 lakhs and now it is Rs 10 lakhs.

State of Kasmir has a special status by virtue of Article 370 of the Constitution of India. Maharaja Hari Singh, the King of Kasmir who signed the treaty with Govt of India for getting this special status expired long back but this Article cannot be repealed due to continuous Muslim unrest. The rest boundaries are either fenced with barbed wire in the borders of Pakistan & Bangladesh. Coastal lands are demarcated by sea coast of Arabian sea in west & Bay of Bengal in East.

In 1994, the Govt defined territory of sea coast as 12 nautical miles. One nautical mile is 1.852 k.m. So, upto this area i.e. 12X1.1852 lkm=22.224 Km, the Govt possess the right of collection of Service Tax. In 2002, wef dtd 1.3.2002, the notification 1/2002 extended this boundary of India to 200 nautical miles which is called as continental self in the language of Geography. This is the maximum area in which any sea excavation etc can take place. After this 200 nautical mile, there is deep sea. Only shark & whales move there!