Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Service Tax »
Open DEMAT Account in 24 hrs
 Central Govt Extended Time Limit to File Refund Claim of Service Tax on Exported Goods: CESTAT allows Refund
 Filing Income Tax Return Early? Make Sure To File Correct Details
 ITR 3 What is ITR 3 Form & How to File ITR-3?
 ITR Filing 2024: How To Claim Tax Refund Online, Check Step-by-step Guide To Know Status
 Income tax return filing for FY23-24: Check details of Form 16 issue date, ITR forms
 How to maximize tax benefits for senior citizens in India
 Income tax return filing: ITR filing 2024 date is upon us, but should you rush to file?
 Income Tax Return AY 2024-25: ITR-1, ITR-2, ITR-4 Enabled for Online Filing; Check Details
 New Tax Regime: What Is It? How Can You Opt For It? Comparison With Old One
 6 Ways to Save Income Tax On New & Old Tax Regime for FY 2023-24
 Income Tax SFT return filing due date extension: Facility to remain open for a couple of days Latest news

Service tax demand on the ESIC
October, 20th 2010

A service tax demand on the Employees State Insurance Corporation may bring the labour ministry and the finance ministry on collision course, less than a year after they locked horns over a similar demand on provident fund payments.

The revenue department has decided that ESIC, which promises health benefits through ones working life, is liable to pay service tax, a move that could increase cost for India Inc to provide mandatory health cover for workers.

Over the last couple of months, field formations of the central board of excise and Customs have been issuing service tax demands to ESICs 600-odd branch offices across the country.

We are not running a for-profit activity that can be taxed as a commercial service, said a senior ESIC official at the corporations headquarters in New Delhi. We are a social security scheme set up under an Act of Parliament, he said, requesting anonymity. He said it would be difficult to put a consolidated number on the tax demand at this stage.

ESIC has an annual income of around Rs 4,500 crore with 5.5 crore beneficiaries under its net. ESIC has alerted the labour ministry about the tax demands and sought a policy-level intervention from the government.

This is the second time in less than a year that the ministries of finance and labour are heading for a showdown over taxability of social security schemes. Last November, a service tax demand was raised on the countrys largest retirement fund -- the Employees Provident Fund Organisation (EPFO).

The demand, originally at around Rs 461 crore, has now been confirmed at over Rs 1,000 crore. While the EPFO is filing an appeal against the demand, it is also creating a contingency plan to shift the tax burden to employers if the demand is upheld.

Employers currently pay 1.1% of EPF contributions as administration charges, which would go up if service tax becomes applicable. The ESIC is also expected to hike administrative costs paid by employers to factor in service tax.

Applicable on workers earning up to Rs 15,000 a month, the state-run insurance scheme is financed by contributions from employers and employees. Employers pay 4.75% of wages and employees chip in 1.75%. The ESIC has a large network of hospitals, whose operational costs are shared by the Centre and the states.

The scheme is applicable to all factories with 10 or more workers and retail trade establishments with 20 workers or more. There scheme covers 1.43 crore families.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting