21 more areas under service tax

Taking advantage of the boom in services sector comprising half of national output, Finance Minister P Chidambaram on Monday extended the tax net to 21 more areas for mopping up Rs 17,500 crore (Rs 175 billion) next fiscal, up from Rs 14,150 crore (Rs 141.50 billion) to be mobilised during 2004-05.

The Union Budget, presented in Parliament, proposed no change in the Service Tax rate now at 10 per cent, but brought in services like construction of residential complexes and apartments, excavation and earth moving, transport of goods through pipeline, dredging in rivers and ports, club membership, packaging and mailing services under the tax net.

Other activities like survey and map-making by private firms, cleaning services, other than those involved in farm sector, will also come under the service tax net.

The scope of the tax has been extended for existing services like renovation of building and civil structures, broadcasters providing DTH, reconditioning and restoration of motor cars and manpower recruitment firms providing temporary jobs and others.

Video tape production and sound recording for remixes will also attract service tax. The budget expects Rs 17,500 crore from service tax in 2005-06 as against the targeted Rs 14,150 crore for this fiscal.