Double Taxation (Lagan) in Independent India on the Same Income

An Indian resident individual who renders his expert services to a company as an consultant in India is by default has to pay Income tax on his various types of income whether this is his professional fee, rent and interest income etc. 

Service tax is a part of Central Excise in India.  It is a tax levied on services provided in India, except in the State of Jammu and Kashmir. The responsibility of collecting the tax lies with the Central Board of Excise and Customs(CBEC).

The ex-Finance Minister of India, Pranab Mukherjee in his Budget speech had indicated the government's intent of merging all taxes like Service Tax, Excise and VAT into a common Goods and Service Tax by the year 2011. To achieve this objective, the rate of Central Excise and Service Tax will be progressively altered and brought to a common rate. In budget presented for 2008-2009,it was announced that all small service providers whose turnover does not exceed  1,000,000 need not pay service tax.  But if it exceeds, one has to pay the service tax on the entire amount. As the time has passed, almost all services have been taken in this net. The Service Tax, imposed under Finance Act, 1994, which taxes the provision of services provided by service providers within India or services imported by Indian from outside India. 

The resident individual talked above is giving his expert services to one or more companies.  If his professional fee gathered is more than one million rupees in a year, even by only one rupee, he is liable to pay 12.36% of service tax to CBEC as well.  He is not being able to collect the tax from his clients as normally service providers do.  Examples of such service providers are many, such as beauty salons, photographic shops, telephone/ mobile service providers, airlines, ticket booking offices for flights/holidays, restaurants etc. Thus the service tax and income tax are in fact double taxation on the expert consultant.  At best, he gets little relief from income tax department by considering the service tax paid as his expenses for earning the professional fee.  In fact his professional fee income is liable to income tax as well as service tax.  Is it not the case of double taxation?  In British times, we criticized double or multiple lagans on farmers, why not we do such an act of Governments in our Free / Independent India.

He is also liable to pay other indirect taxes too.  Professional taxes are also paid in some of the States of India – even by salaried employees.  In fact, an individual is subject to many forms of taxes.  If he buys an manufactured good for his consumption, he is indirectly paying excise taxes besides sales tax/ VAT.  If he buys imported good, he is paying import duties.  If he buys any services, he is to pay service tax being collected by the organized service providers.  Even if he goes for a movie, he has to pay entertainment taxes.  If he happens to eat his food in some good restaurant, Government also share food with him compulsorily as the service taxes are being charged.  Even many restaurants have starting taking advantage of the service tax they are liable to collect from the customer as they add to it the service charges (which was earlier not mandatory as this amount was being paid by some of the customers as tips to waiters).  Government is happy as they get their share from the sale of the goods and services which are being purchased by the people who wants to consume the same..  Is it not the case of multiple taxation?  In British times, we criticized double or multiple lagans on farmers, why not we criticize such acts of Governments of our Free / Independent India.