Budget speech

   
Services provided by chartered accountants, cost accountants, and company secretaries as well as by engineering and management consultants are presently charged to service tax.  Although there is a school of thought that legal consultants do not provide any service to their client, I hold my distinguished predecessor in high esteem and disagree!  As such, I propose to extend service tax on advice, consultancy or technical assistance provided in the field of law.  This tax would not be applicable in case the service provider or the service receiver is an individual.
 
Vehicles having 'Stage Carriage Permits' and run by State undertakings are exempted from service tax. However, transportation of passengers undertaken by private enterprises in vehicles having 'Contract Carriage Permits' is, subjected to service tax.  In order to bring parity in tax treatment, I propose to exempt such transportation also from the levy of service tax.
 
In July, 2008 goods transport agents (GTA) went on strike with several demands.  One of the demands that was accepted by the government was to exempt certain services, such as packing, cargo handling and warehousing, provided to GTAs en route, from service tax.  For this purpose an exemption notification was issued. It was also demanded by goods transport agents that the proceedings already initiated against such service providers should be dropped.  The Government has accepted this genuine demand. Therefore, I propose to make certain legislative changes required to fulfill this promise.
 
My tax proposals on direct taxes are revenue neutral. On indirect taxes, they are estimated to yield a net gain of Rs.2,000 crore for a full year.