New intel units, 800 personnel to check service tax evasion

Move has come in wake of govt witnessing growth in service sector and increase in number of taxable services

The Finance Ministry has cleared creation of new intelligence units across the country and appointment of over 800 personnel to check any leakage in its earnings from the indirect tax.

Anticipating increase in service tax revenue, the ministry has also decided to restructure Directorate General of Central Excise Intelligence (DGCEI) -- a body tasked with checking excise duty and service tax evasion, official sources said.

There will be three more zonal units of the DGCEI in Lucknow, Bhopal and Hyderabad. These three zonal units will have three regional units each as well, they said.

"The government has approved total nine zonal units and 27 regional units of the DGCEI to check leakage of excise duty and service tax evasion," a Finance Ministry official said.

At present, DGCEI has six zonal units and 18 regional units.

"A proposal for appointment of 828 personnel at the new zonal units, regional units and strengthening the existing branches of the DGCEI has also been approved by the government," the official said.

The move has come in the wake of the government witnessing a growth in the service sector and increase in the number of taxable services.

"Although service tax has shown tremendous potential as an area of tax collection, it still remains a largely untapped and unexplored sector.

"The contribution of service tax to the gross tax revenue at a mere 13% is not commensurate with the contribution of service sector to the Gross Domestic Product of our country which was more than 60% in the last financial year. It is, therefore, essential to provide more manpower for service tax related matters," according to a intra-ministry communication on the issue.

The government was earlier considering to create a separate unit for checking service tax evasion. However, the plan was shelved and it was decided that no separate directorate was needed and instead these new units were carved out.