Saturday, June 30, 2012

All services, except those under a ‘negative list’, will cost more

Starting today, most services will be taxed 
Negative list of 38 will escape levy  

All services, except those under a  ‘negative list’, will cost more
Except 38 services under the negative list, all others will  be taxed at 12 per cent under the new service tax regime that kicks in on July 1.  
The Government had said earlier it would implement the negative list from July 1.
 Metered taxis, auto-rickshaws, betting, gambling, lottery, entry into amusement parks, transport of goods or passengers and electricity transmission or distribution  are in  the negative list. Other important services that will not be taxed include  funeral and burial, and  transport of the deceased.
 Coaching classes and training institutions will come under the net, though the tax will not be levied on school, university education and approved vocational courses.
Services provided to the Government, local authorities or a Government authority to  repair or maintain  aircraft would also fall under the negative list.
 Services that advocates provide to other advocates, or business entities — up to a turnover of Rs. 10 lakh in the preceding financial year — are exempt. Service providers offering facilities for  public convenience, such as bathrooms, washrooms, urinals or toilets, will not be  taxed .

Rail fares

 There is, however, no clarity  on whether the tax would apply to  rail freight and passenger fares .
 The Union Minister of Railways, Mr Mukul Roy  said  the rail transporter  will not impose tax  on freight movement and  passenger fares from July 1. 
He  has written to Prime Minister, Dr Manmohan Singh, who now holds  the Finance portfolio, in this regard.

Negative to positive

The Government has widened the definition of ‘services’ to  tax more business activity. 
As of now, 119 services that come under the ‘positive list’ will attract the levy. 
This new approach to taxation of services is intended to take  the economy a step closer to   the proposed Goods and Service Tax  regime. 
 The finance ministry is aiming to mop up  Rs. 1.24 lakh crore by taxing services  during the current fiscal. 
Last fiscal,  the collections were Rs. 97,000 crore . 

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