By G Prabhakara Sastry, Advocate

AT last, Budget, is slowly mutating in to a “process” from its original stature of an “Event”. The change in the current year is glaringly visible without any fire works and fine proposals.

The Finance Minister disappointed the service sector by the increase in Tax from 10% to 12% without touching the exemption limit of four Lakhs for small service Providers. First of all keeping 4 lakhs exemption for all Services itself is a great anomaly. A four lakh annual business to a Company Secretary is a flourishing preposition in view of his low overheads, but a similar exemption to a beauty parlour is too low, considering the huge establishment costs and other overheads.

Increase in Service Tax from 10% to 12% will make small service providers more weak as it will be just impossible for small and medium stage Service providers to compete on one side with the fully exempted sector and on the other, the high-fly large scale operators who can easily absorb the Tax in their profits. It is highly essential that a via media rate of 6% - 8% is made available to middle level operators, which is not done.

Service Tax wing of the department is a very sensitive area where the chances of Tax evasion are bright and consequently the opportunity for corruption. No attempt is made to make the operations transparent and the powers of the officers dealing harshly with the trade are not interfered with.

Instead of bringing Doctors, Advocates Corporate schools, Hospitals and the like under service Tax levy, it is unfortunate that newly created and popularity gaining facilities like ATMs are subjected to Tax. It is not understood as to how ATM transactions are Taxed, when many of the banks are not Charging for carrying out operations in ATMs.

Rate of Excise duty increase on cigarettes, substantial reduction of duty on aerated waters, and other politically flavoured decisions like reduced Excise duty on gas stoves, imposition of excise duty on computers with CENVAT facility, etc., cannot enthuse the common man as also the communist man.