The contribution of the service sector to the c is very prominent. This study attempts to find out the contribution of the service sector to the Indian economy and issues involved in the service tax structure. It is found that the service sector has experienced higher growth in a more uniform and consistent manner. With sectors like `financing, insurance, real estate and business services' experiencing high compound growth rates, there could be an upsurge in industryrelated services in recent years. The study reveals that the collection of service tax in India has increased phenomenally because of the addition of more and more services every year. It is also found that the government needs to plan a fast transition from the present system of inefficient indirect taxation to an integrated goods and services tax (GST) system, which subsumes all forms of indirect taxation at all levels of the polity, which in turn will ensure transparent accounting of taxes and would make sure that the exporters are neither burdened by taxation nor are cosseted by subsidies, while giving the local producers a level playing field visàvis imports.
In
India, one of the most encompassing and growing areas of activity is the services
sector. Traditionally we have been thinking only of finance, insurance, transport,
communication and tourism in the services sector. But the present trend has crossed
these boundaries. Promising and emerging areas such as environmental, educational
and counseling services have also become part of this emerging sector today. The
sheer heterogeneity of activities within this sector is going beyond the hitherto
static feature of nonstorability, nontradability and intangibility.
In
the last two decades, it is evident that the services sector has expanded rapidly
all over the world, though by comparison in India the growth has not been so pronounced.
In fact, India has lagged behind, compared to even some South Asian countries.
Interestingly some of the developing countries like those of Latin America have
services accounting for a higher percentage of GDP than the world average or even
Japan. Generally speaking, the developed countries have dominated this expansion
of services accounting for threequarters of the world services output. In 1997,
services sector output was valued at $6.1 tn or 61% of global output of goods
and services. The sector constitutes more than 60% of the economic activity in
all OECD countries. Correspondingly, the services today constitute over 50% of
economic activity in developing countries, which is significantly more than the
traditional sectors such as agriculture. |
