MUMBAI: The finance ministry is contemplating several reforms in the indirect tax space, even as the Goods and Services Tax (GST) has been caught in a political tussle.
There is a possibility that the exemption threshold for payment of service tax will be hiked. This will be good news for many small independent service providers, ranging from consultants to interior designers. But the government is also considering a balancing act by lowering the exemption threshold limit for excise.
At present, if the aggregate value of services does not exceed Rs 10 lakh in a financial year, the service tax provider can claim exemption. Under excise laws, small-scale industries enjoy exemption if the goods cleared from their factories during a financial year are valued at Rs 1.5 crore or less. While no final decision have been taken yet, the service tax exemption threshold limit could be hiked from Rs 10 lakh to Rs 25 lakh. “It will be very difficult to reduce the threshold limit under excise at one go to Rs 25 lakh, but there will be some palatable adjustment,” said a government source.