Delhi: In what is the largest-ever revision of service
tax rules and procedures by the government, the finance
ministry on Tuesday issued two omnibus circulars aimed
at simplifying procedural and technical service tax rules.
The fresh draft will supersede all existing circulars
and notifications issued since 1994, when service tax
rules came into effect.
ministry officials said the new circulars could result
in increased tax collection and was also likely to widen
the service tax net. These circulars are expected to plug
loopholes in the existing ones that are being used by
many service providers to escape the tax net.
Centre has now made it mandatory for companies seeking
service tax exemption to register with the tax department
after their annual turnovers cross Rs7 lakh, even though
tax exemptions are applicable till the Rs8-lakh- turnover
the existing 200-odd circulars issued by the Central Board
of Excise and Customs (CBEC) stand superseded by the two
new circulars take on board the recommendations of the
TR Rustagi Committee, formed last year to suggest ways
to simplify service tax rules.