Revenue dept gets FM’s nod for negative list on
services
Posted by General Secretary, AICEIA, VIZAG
Delhi: Finance
minister Pranab Mukherjee has given approval to the revenue department to go
ahead with the negative list on services so that it could be implemented from
the next fiscal. The list is important to roll out a uniform goods and services
tax regime that the government intends to introduce soon.
At the meeting with finance secretary RS Gujral, CBEC
chairman SK Goel and other senior officials of the revenue department on
December 20, the minister asked the department to work on the implementation of
the new system.
In the negative list, almost all services except a select
few would under the tax net. Currently, 117 services are taxed at a rate of
10%. Service taxes are a high-growth revenue source for the government in a
country where services account for more than half of the GDP.
Last month, the government issued a revised draft of the
negative list of services and asked for feedback from various stakeholders by
December 15. The first draft was released in August this year. According to a
finance ministry official, once the shift from the current practice of taxing
services on a selective basis (positive list-based) to the negative list is
implemented, tax revenue would pick up by 20%.
However, the official said that though the finance minister
and revenue department want to implement the negative list from next year, the
political repercussion of the new list could prevent its introduction. However,
a major stumbling block in the form of Assembly elections in five states —
Uttar Pradesh, Uttarakhand, Manipur, Punjab and Goa — has been removed by the
Election Commission as the process would be completed just in time for the
Union Budget.
According to the revised paper, 22 categories of services
would figure in the negative list. The services added to the proposed negative
list in the new draft compared to the previous one include some services
relating to agriculture, horticulture and animal husbandry, services provided
by freelance journalists, government news agencies and advertisements in media
other than newspapers and TV. In the first draft, 27 services were kept outside
the tax net.
Besides these, government services would be exempt. However
those where they compete with the private sector would not be exempted. Hence,
insurance services, port and airport services, posts, trade fairs and
exhibitions, business promotion services, construction/work contract, renting
of immovable property, security services etc. would be taxed.
Source:
The Financial Express dated 26.12.2011