constituted - of Planning Commission

Service Tax: For estimation of service tax, it is observed that the historicalbuoyancy has been quite high but this was on a small base and in the period2003-04 to 2010-11, the statutory base has also expanded to include additionalservices on which service tax is to be levied. Consequently, the scope for futureincrease in the statutory base for service tax is limited. The estimates forservice tax have, therefore, been taken by frontloading the buoyancy, i.e. ahigher growth rate of 18.5 per cent (buoyancy 1.28) has been projected for2012-13 which tapers down to 14.5 per cent (buoyancy 1) in 2017-18, i.e., thefinal year of the Twelfth Plan period.Base line Projections:The tax-wise breakup of the projections is at Annexure-III. The resultant taxrevenue projections and tax-GDP ratios are reported in the Table 2.1.Financial year 2011-12Centre’s TaxRevenueCentre’s tax GDPratio(BE)Table 2.1:Overall Tax RevenuesProjection(` crore)2012-13 2013-14 2014-15 2015-16 2016-17930469 1087790 1285135 1516421 1774298 206279910.36 10.58 10.92 11.25 11.50 11.67Other Method ConsideredThe Group also considered other methods of estimating revenue; includingbuoyancies and elasticities in respect of key taxes. The buoyancy methodimplicitly assumes that there are little discretionary changes in the tax system.Instead of estimating buoyancy on the basis of actual data, the Groupconsidered the estimates using buoyancy assumptions for two major direct taxes- low (historical low in the last 5 Plans), high (historical high in the last 5 Plans)and a judgmental one used by the Group. Apparently the buoyancy is at theWorking Group Report on Centre’s Financial ResourcesPage-17