Study team to examine possibility of common code for service tax and central excise

The finance ministry has set up a study team headed by M K Gupta to examine the possibility of a common tax code for service tax and central excise, which could be adopted to harmonise the two legislations.

Gupta, a retired IRS officer, is a former vice-chairman of the Customs and Central Excise Settlement Commission.

While presenting the union budget for 2012-13, finance minister Pranab Mukherjee had announced plans to examine the possibility of a common source code for the two taxes.

The study team will examine the feasibility and also suggest a draft common tax code for service tax and central excise that can be implemented under the present Constitutional scheme, keeping in view the challenges in the context of impending Goods and Service Tax (GST).

The study team has also been directed to address issues relating to input tax credits with a view to simplify the existing scheme and to mitigate cascading to the extent possible, and to harmonise existing procedures and processes to make them more trade-friendly, an official release said.

The team may also suggest any other measure that will help in reducing the cost of compliance for business or transition towards a comprehensive GST.

As part of its efforts, the study team will interact with various chambers of commerce and industry and recognised business and industry associations representing various segments of the services and manufacturing sector, as may be required, the release said, adding that the study team has been asked to submit its report by 30 September 2012.