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The Centre has proposed to allow state governments to charge service tax on doctors and lawyers by next year. Top revenue department officials said states would get the right to levy service tax on local services, while in pan-Indian sectors like telecom services, tax will remain with the Centre.
A decision is likely to be made within this year so that the states are able to pass their tax laws through their legislatures, accordingly. At present, it is only the Centre which levies service tax on 96 categories of business.
But states have been clamouring to get a part of the Rs 34,500-crore corpus (Budget estimates for '06-07). They have linked the roadmap for the phase out of the Central sales tax with the demand to impose service tax on several categories of enterprise.
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