My friend appears to be bit confused. He may please note that Service tax collected on any type of service provided is ultimately borne by customers or consumers. Doctors and CAs may or may not pay Service tax collected to Govt. depending upon whether they have issued a valid receipt for the fess collected from customers. Moreover, if the total receipt of the profession during a particular financial year is not likely to exceed Rs.8 lakhs, such a professional should not charge and collect Service tax from customers. ST collected by a professional coming undr this category, is simply poketed by that person and no payment of ST is made to Govt. Or even if made, it is received back from the Govt. as refund since such persons are not liable to pay ST.
Next point is that doctors, lawyers and CAs should fully pay tax on their real income. Many a time these professionals discourage demanding valid receipts for the payments made to them by showing the ghost of Service Tax component. Consequently their real income is suppressed. Ultimately, the FM is trying to help the richy-rich professionals to reduce their income-tax liability by bringing more services under ST net. But then, FM refuses to see the dark side of Service Tax. At the end of the day, it is the poor nan who ends up paying multiple taxes in multiple forms and the rich people always escape.
