Audit Reports
Indirect Tax
Report No. 15 of 2011 - Performance Audit of Service Tax on Banking and other Financial Services and Duty Drawback Scheme Union Government, Department of -Indirect Taxes
Overview
This section contains a performance audit of Service Tax on 'Banking and other Financial Services'. We conducted a performance audit to evaluate the adequacy of provisions of the Finance Act, 1994, Service Tax Rules and related instructions in ensuring proper levy, assessment and collection of service tax on Banking and other Financial Services.
We found procedural deficiencies in registration of assessees, receipt of returns, scrutiny of returns, ambiguities/inadequacy in rule provisions and non-compliance. While the total financial implication of this audit intervention was RS 1923.30 crore, the direct additional revenue which could come to the Government was RS 264.50 crore. Observations with money value of RS 90.55 crore had been accepted by the department and RS 21.52 crore recovered.
We identified 1142 service providers who had provided Banking and other financial services and were liable to pay service tax but were not on the departmental registration lists. We found that 65 of these potential assessees were liable to pay service tax of RS 92.12 crore. We recommended that the department may liaise with statutory authorities such as the RBI to obtain information regarding non banking financial companies to bring them under the service tax net.