RTTNews - The Indian government is considering restoration of a 12% service tax that was reduced to 10% in the third stimulus package unveiled in February, reported the Economic Times.

According to highly placed government functionary, the move is considered as government expenditure is rising because of its attempts to encourage the economy, whereas the revenues are declining due to a slowdown in economic activity. However, the Finance Minister in consultation with the Prime Minister's Office and the Planning Commission will decide it finally.

As per provisional estimates, service tax collections grew 18% in 2008-09 to Rs.60,000 crore inspite of the decline in indirect tax collections.

Some sections of the government are of the view that the segment suffers due to concessions given to India Incorporation. Including more sectors like education, legal and medical services under the tax net is also being considered as another possibility. But the finance minister have to get political consensus if these services are to be included.

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