The trends in service tax collections in the current fiscal indicate that the final figure may be short by around Rs 1,500 crore (Rs 15 billion) compared to the Budget estimate of Rs 6,026 crore (Rs 60.26 billion).
Taking an average annual growth of around 14 per cent in the major taxes in the country, the incremental growth in the tax on services from the remaining Rs 1,200 crore (Rs 12 billion) works out to around Rs 686 crore (Rs 6.86 billion).
Considering that the Centre had taxed the most promising 51 services in an effort to boost revenue, the total kitty is not so impressive.
This includes about Rs 1,200 crore (Rs 12 billion) that the revenue department had estimated from the life insurance sector.
Tax on this category was introduced in the current fiscal but because of the representations made by the insurance industry it was deleted.
Of the total incremental service tax collections of Rs 2,426 crore (Rs 24.26 billion), the life insurance sector was to be the largest contributor.
The Central Board of Excise and Customs expected to garner the amount from the 10 new services, including life insurance that had been introduced in the 2002-03 Budget, and the normal growth in the tax base of the existing categories.
In the last fiscal, the collections from service tax were Rs 3,600 crore (Rs 36 billion).
Official sources said insurance auxiliary services agents were expected to contribute another Rs 300 crore (Rs 3 billion).
While the half-yearly figures for service tax returns have not yet come in because the taxes were notified only in July this year, initial estimates suggest that a similar amount would accrue from inland cargo handling, storage and warehousing services, and rail travel agents.
This leaves less than Rs 100 crore (Rs 1 billion) as tax from the sunrise sectors, like fashion designers, beauty parlours, health and fitness clubs and dry cleaning services.
The picture is worrisome for the states because these are the areas that will be eventually taxed by them, as categories like insurance services, rail agents and even storage services may be retained by the Centre.
The Union Cabinet last week cleared a Bill to allow states to levy service tax by amending the Constitution.