Infra consulting firms demand exemption from service tax

Say the notification is highly discriminatory, prejudiced and unjust to the consultants

Infrastructure consulting firms have requested the government to exempt them from service tax at par with contractors and concessionaires.

"The government-funded infrastructure projects are impeded by discrimination against the consulting engineering companies by levy of service tax. This critical issue originated with the introduction of Point of Taxation Rules 2011 & subsequent amendment in Finance Act 2012," infrastructure consultants said in a letter to Finance Minister Arun Jaitley.

They demanded a relook at the service tax introduced under the Finance Act 2012 and treatment at par with contractors and concessionaires as they are exempted from payment of service tax as per a June, 2012 notification.

"For implementing infrastructure projects practically all other agencies like contractors and concessionaires are exempted from payment of service tax... Whereas consulting engineering companies have been singularly denied exemption and brought into the ambit of service tax," said Co-Chairman, FICCI's National Committee on Transport Infrastructure and Chairman, International Road Federation K K Kapila.

Kapila said as against the earlier provisions of paying service tax within 30 days of receipt of payment, the consultants are being forced to pay service tax within 30 days of issuance of invoice itself and delayed payment further attracts "huge interest" of "18 per cent".

"The notification is thus highly discriminatory, prejudiced and unjust to the consultants... Many of the consultancy companies are likely to go out of business due to discriminatory, unfair and unjust provisions," Kapila said demanding treatment to such firms at par with other agencies.