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NE MPs bat for deferment of service tax in Sikkim

NE MPs bat for deferment of service tax in Sikkim

THE North East MPs Forum has written to the Prime Minister of India to extend a window of five years for preparedness before imposing service tax in Sikkim. The state which has witnessed over 20 percent growth in tourism has created a large number of employment for young people in travel agencies, transportation, hotels and guest houses.

“This is not the time to tax them with service tax. Many of them do not even know how to keep books of accounts…There is palpable anger amongst this section of this population,” a letter dated May 25, 2011 and signed by Forum’s chairman Mukut Mithi and general secretary Birendra Prasad Baishya said.
In fact, most tour operators and travel agents in Sikkim were surprised to receive notices from the Superintendent (Anti-Evasion) Central Excise and Service Tax Department, Siliguri Commissionerate asking them to provide the requisite information and comply the service tax with retrospective period from 2006-2007 onwards and comply within March 31, 2011.
Currently, under the government of India’s exemption scheme for the North-East, most heavy industries are being exempted from service taxes and direct taxes. Sikkim which became a part of India only in May 1975, is formally a part of India’s North East.

The North-East MPs have now argued that imposing tax “will increase cost of visiting North East Region which is anyway difficult to reach”. “There is a real fear of falling sales which is frustrating. Hence it is being seen as a misery tax”, said the letter.