Voluntary compliance encouragement scheme as offered by the Union Budget presents ‘an opportunity to be seized.’
This is despite the possibility of an honest taxpayer who paid tax on time and now treated at par with a defaulter, challenging it.
The scheme grants service tax defaulters an option to clear dues relating to past five years, said Sherry Samuel Oommen, senior adviser, GyanMagnus Associates.
There is also waiver of interest and penalty with the option of making the payment in instalments but subject to conditions.
These are: the assessee has to file a declaration stating his tax dues under service tax on or before December 31, 2013.
Service tax dues should pertain to the period from October 1, 2007, to December 31, 2012, Oommen told Business Line.
As on March 1, 2013, no investigation, inquiry or audit should be pending against the assessee.
The assessee should pay at least 50 per cent of the tax dues declared by him on or before December 31, 2013.
The balance can be paid on or before June 30, 2014, without any interest or penalty.
If the assessee extends pay-up till December 31, 2014, no penalty will apply but interest calculated from July 1, 2014, will.
On complying with the above provisions the assessee will get immunity from payment of interest, penalty or other proceedings.
Proceedings, if any, must be initiated within one year from the date of declaration failing which the department forfeits the option.
Another major change is the extension of service tax to all restaurants having air-conditioning facility, Oommen pointed out.
Earlier only restaurants having both air conditioning facility and license to serve liquor were taxable.
This proposal has far reaching implications and is not a welcome move during a time when inflation is on the higher side.
This will make food served in air-conditioned restaurants, coffee shops and other food joints costlier by approximately five per cent.
In 2012, blanket exemption was provided with respect to licensing of copyright relating to cinematograph films.
This time round, the blanket exemption has been taken away, Oommen said.
Exemption is now limited to licensing of cinematograph films for exhibition in a cinema hall or cinema theatre.
So, licensing of cinematograph films for all other purposes including broadcasting would be subject to service tax.
The intention here is to pass on the credit to the broadcasters, Oommen said.