The Tamil Nadu Chamber of Commerce and Industry has strongly objected to the suggestion of Prime Minister's Economic Advisory Council Chairman (PMEAC) C. Rangarajan to bring excise duty and service tax back to pre-crisis level.
The excise duty and service tax rates were brought down marginally when industrial production and economic growth considerably decelerated due to the impact of international economic slow down and financial crunch.
In a statement issued here, Chamber senior president S. Rethinavelu said that PMEAC's review of Economy 2011-12 presented by Dr. Rengarajan himself had acknowledged that manufacturing and construction activities have been sluggish during the first three quarters of 201112 and the over all growth rate will only be 3.9 percent and 6.2 percent respectively.
From being levied only on three services when it was introduced in 1994, service tax has expanded to more than 120 categories covering millions of service providers and service receivers.
Despite the reduction of rate from 12 per cent to 10 per cent, service tax revenue was estimated to cross Rs. 90,000 crore this fiscal. Since more and more services are brought under the service tax net every year, the rate should necessarily be reduced.
Mr. Rethinavelu urged the Government to opt for reducing service tax and central excise rates, if not maintain the status quo.
With the impending introduction of GST, any increase in these rates would impact industrial production and retard economic growth in the country.