The finance ministry is considering the removal of the double-taxation policy on the industry and services sectors, particularly in the telecom sector, to simplify and rationalise the existing tax structure.

Speaking at a seminar conducted by industry body Assocham, PC Jha, a member of the Central Board of Excise and Customs, stated that the telecom sector is registering a growth of 30%, while the growth of its service tax collection is just 9%.

I have issued instructions to the concerned department to look into the issue as the ratio between the growth of the telecom sector and that of its service tax collection is not commensurate. The ministry will shortly make an announcement to this effect making amendments to the circular open to double interpretations, to ensure that services are only taxed once, he said.

He added that for the current fiscal so far, the service tax revenue collection has exceeded previous years collection by 65%. The ministry intends to collect a revenue of Rs 4,50,000 crore, both through direct and indirect taxes. The imposition of a service tax is expected to contribute a revenue of Rs 40,000 crore in this fiscal, said Mr Jha.

He said that the government has fallen short of its revenue collection, both from direct and indirect taxes, by a significant percentage because the industry has not been coming forward to pay the taxes, thus creating a compliance problem.

Therefore, the government has decided to control those manufacturing units that are practising tax evasion and avoidance. Finance minister P Chidambaram has already issued necessary instructions to tax officials to ensure tax compliance without harassing self-tax assessors, added Mr Jha.