Published On: Mon, Jul 2nd, 2012

Taxes to be levied on almost all services under new Policy

Tax

When the common man is already dying under the burden of inflation and corruption, the new service tax regime will make it more difficult for him to survive. The government of India is rolling out a new tax regime based on negative concept list.

The definition of ‘Services’ has been widened by the government to bring in more activities under the tax net. Till now, 119 services that come under ‘positive list’ are subject to the levy.

This new approach towards taxation of services is intended to take the country and the economy a step closer towards the introduction of Goods and Service Tax (GST).

As per the rules issued by Finance Minister, 38 services under the negative list will be exempted from taxation. However all other services would have to pay 12 percent service tax. This has been implemented from July 1.

As per the negative list, Services like metered taxis, autorickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and electricity transmission will not come under the service tax net as per the new negative list.

Other important services like funeral, burial, mutate services and transport of deceased will not attract the tax.

Coaching classes and training institutions will also come under the net. But the tax will not be levied from school, university education and approved vocational courses.

However there is still confusion about the service tax on rail freight and passenger fares. Railways will not introduce service tax on freight and fare from July 1 as per Railway Minister Mukul Roy has said. He has also written to Prime Minister Manmohan Singh, who is now looking after the Finance portfolio, in this regard.

Apart from this, the services for the repair and maintenance of an aircraft provided by government , local authorities or government authorities would also come in the negative list.

Services provided for public convenience such as facilities of bathroom, washroom, urinals or toilets would be included in the negative list. Services relating to works contract to a scheme under JNNURM or Rajiv Awas Yojana would also come under the negative list.

The services provided by advocates to business entities up to a turnover of Rs. 10 lakh in the preceding financial year are exempted from the service tax.

Auxiliary educational services and renting of immovable property by educational institutions in respect of education would also be exempted from service tax.

The Finance Ministry has set a target of Rs. 1.24 lakh crore for service tax collection in the current fiscal, higher than Rs. 97,000 crore collected in 2011-12.

Source: ndtv.com

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