Question : PERMISSION TO STATES FOR IMPOSING SERVICE TAX

(a) Whether the number of States including the State Government of Tamil Nadu have been requesting the Central Government to empower the States to collect service tax in their respective States;

(b) if so, the details of such proposals which have been received by the Union Government, State-wise;

(c) whether the FICCI has also requested the Union Government for the same; and

(d) if so, the steps taken by the Union Government to empower the States to collect tax on services and thus generate additional revenues for taking up social services?

MINISTER OF STATE IN THE MINISTRY OF FINANCE & COMPANY AFFAIRS (GINGEE N. RAMACHANDRAN)

(a), (b) & (c): The States have taken an unanimous decision to replace their existing sales tax systems with a Value Added Tax system from 1st April 2003. In this context, and also to widen their tax base, all the States have requested that they should be allowed to levy tax on services. The request of the States has also been supported by various trade and industry organizations, including FICCI.

(d): Appropriate action has been initiated in this regard.