India, after embarking on economic reforms, was in search of revenue sources for huge developmental expenditure and reduce deficits. It brough ‘service tax’ in year 1994 and in since than, it became important source of revenue that has given impetus to fiscal discipline, robust economic growth and equitable society. The paper discusses issues in the service tax, being a sunrise tax, novice idea, lack of cohesive legal enactment and related issues. In 2017, Government of India introduced GST (Goods and Service Tax), that is clubbing of indirect taxes like Excise (Manufacturing), Custom (Import, Export) and Service Tax. GST is applicable uniformly across India and establish mechanism to reduce competition between the States (India have 29 States) and their share with Union Government.
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Keywords: service tax, fiscal discipline, sun rise tax
JEL Classification: E6, P13