Service tax reform in India

Abstract

The poor Tax/GDP ratios in India as compared to developed and even developing nations has been the subject of many a scholarly piece. In India the deterioration in Taxi GDP ratio mostly between the early nineties when economic reforms were initiated and the present day when the first generation of economic reforms seem to be running out of steam has been quite significant. One of the silver bullets which was supposed to have bailed out the government's fiscal performance has been the Service Tax which is now ten years old. This study aims to study the way Service Tax in India has evolved over the last ten years. Essentially it is an attempt at studying the growth patterns and trends at the macro level with the help of statistical details together with an attempt to study the implementation problems at the field level, by close interaction with the assesses and field officers ( street level bureaucrats if you will .)This study aims to address issues both at the policy level viz tax design, base, coverage etc as well as problems of implementation and procedure and more mundane ones such as the infrastructure and staffing and training . One of the very significant features which this study focuses on is the disconnect between the tax policy planners and designers and the implementers in the field. This study has also tried to document in its own way the efforts of a tax collection agency which was mainly responsible for collecting taxes on tangible goods from a rather small base of established manufacturers with an established business identityIsignature Ifootprint to come to grips with a new levy which was on intangible services, where the assessee base was considerably large and where a significant portion of the revenues came from outside the organised sector.