Service tax collection is likely to cross the Rs 40,000 crore (Rs 400 billion) mark this fiscal, far exceeding the target of Rs 35,000 crore (Rs 350 billion), a senior Finance Ministry official said on Thursday.

Meanwhile, the government has roped in post offices in Delhi for service tax collection from July 1 for convenience.

Service tax collection is likely to cross Rs 40,000 crore as against the target of Rs 35,000 crore this year, Central Board of Excise and Customs chairman V P Singh said at an Assocham seminar on service tax in New Delhi.

"The government is very optimistic about service tax collection," Singh said. He said a new initiative has been taken for faster and hassle free filing of service tax by involving post offices in Delhi and will extend this service to other cities soon.

"Post offices have been authorised to accept applications for service tax in Delhi. Assessees can file half-year returns through post offices," Singh said.

Singh said initially 22 post offices in Delhi have been authorised to collect service tax, which will substantially reduce the burden of the department.

Service tax collection in April-June this year increased by 54 per cent, he said, adding the department is focusing on voluntary compliance. However, service tax evasion is a matter of concern, according to the Central Excise Commissionerate's S C Mathur.

Mathur said only 50 per cent of the service tax returns are filed, many stopped filing returns after first filing, many collected tax from customers but have not deposited the money with the government while some availed credit without proper documents.