News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Service Tax »
 Can these deductions make you tax free?
 Best mid cap mutual funds to invest in 2020
 Income tax calendar for the year 2020
 How to reduce your tax liability while changing job
 Best debt mutual fund strategy for investors in 2020
 December 31 is the last date for these financial tasks
  Income Tax Alert! Want to avoid double penalty? Do this before December 31
 How much you will have to pay for missing December 31 deadline
 Waiver of Interest for TDS deducted under section 194M
 Is it mandatory to file ITR even if your income is below Rs 5 Lakh?
 Filing Late Tax Returns in India: Penalty and Deadline for AY 2019-20

Service sector cos to get tax
June, 12th 2009

Employment generating companies in the service sector are likely to get a boost in the forthcoming Budget in the form of tax incentives. This can be through a tax benefit, which will be in proportion to the number of new jobs created by companies, said an official with the income-tax department.

At present, the manufacturing sector gets a tax incentive for all additional jobs it creates every year. The government now wants to spread the benefit to companies in the service sector, too. The incentive, currently, is a deduction of 30% of the amount paid as wages to newly-recruited regular workmen. These incentives are provided for the manufacturing sector under Section 80 JJ AA of the I-T Act.

Under the provision, companies are allowed to claim a deduction for three years subsequent to the appointment of 100 or more new workmen. The governments proposal is similar to incentive structures that some of the EU countries have. While a tax incentive linked to employment can be misused, the benefits, its perceived, may be far reaching.

Advocates of such an incentive argue that a higher employment generation creates a virtuous cycle through greater demand, which in turn pushes up a countrys national income. The service sector accounted for 52.4% of the total GDP in 2006-07 at current prices. Estimates are that the share has increased to around 54% for 2008-09. In recent years, telecom firms, BPOs and financial services company have emerged as big employers in the country.

The sector, according to the governments definition, is categorised as : (a) Trade, hotels, transport and communication; (b) Financing, insurance, real estate and business services; and (c) Community, social and personal services. Of this, trade, hotels, transport and communications generate half the income in the service sector.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2020 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting