Last chance to pay service tax without penalty, warns Chidambaram

Finance Minister P Chidambaram today urged service-based firms which have not paid taxes to avail of the recently announced amnesty programmes Service Tax Voluntary Compliance Encouragement Scheme (VCES), saying such a scheme may not recur for the next 20 years due to various factors, including curbs imposed by the Supreme Court.

During a conference with traders and senior customs, central excise and service tax officials, the finance minister said, "So far the government has received 9,000 declarations under the VCES, out of which only 107 have been rejected."

VCES was introduced from 10 May as a one-time amnesty scheme to pay service tax dues for the period from 1 October 2007, to 31 December 2012, without interest and penalty.

"If you think that a scheme will come again next year or a scheme will come in 2015, you are wrong. Such schemes cannot be announced every year. There is a Supreme Court judgement on VDIS (Voluntary Disclosure of Income Scheme) which ties up our hands in announcing a scheme on the lines of VDIS," Chidambaram said.

"That is why we have to modulate the scheme, so that it does not violate the directions of the Supreme Court. This is a once in a lifetime opportunity [and] certainly will not come for next 20 years," Chidambaram said.

The finance minister has consistently been pushing for more revenue from the services industry. He said there are as many as 170,000 service providers who have voluntarily registered as service tax members; but only 700,000 of them have paid taxes.

Describing the amnesty scheme for service tax compliance as a golden opportunity, Chidambaram said, ''Unless it is complied with, the law will ultimately reach you.'' He pointed out that 15 persons have lately been arrested for service tax violations.