Metered taxis, entry to amusement facilities, second-class rail travel, and betting, gambling and lottery will not attract the 12 per cent service tax, as per the budget proposal.

The negative list of services, on which the increased service tax of 12 per cent will not be levied, includes admission to entertainment events, access to amusement facilities and travel by radio taxis and auto rickshaws.

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

The service tax, according to the budget proposals of Finance Minister Pranab Mukherjee, will be levied on all services which are not mentioned in the negative list.

In order to net about Rs.1.24 lakh crore from the service tax during 2012-13, the Minister has proposed to increase the rate of levy from 10 per cent to 12 per cent.

In addition to the existing services, which are subject to the service tax, the negative list clarified that the tax will be levied on travel by first class and in air-conditioned rail coaches, transport of goods by a transportation and courier agencies.

As regards education, the service tax will not be levied on school, university education and approved vocational courses.

The coaching classes and training institutions, however, will continue to be subject to the service tax.

In order to bring as many services as possible in the net, the government has come out with a wide definition of service. With some exception, it has been defined service as “any activity carried out by a person for consideration.''

The services sector account for about 59 per cent of the country's Gross Domestic Product (GDP).

According to the negative list, postal services, including Speed Post provided by the Department of Post, will not attract service tax.

Distribution of electricity, trading of goods, agriculture extension and support services, road tolls, renting of residential properties and services relating to bank deposits and sanction of loans too will not attract the service tax.

As regards sale and purchase of foreign currency, it has been clarified that such activity among the banks and dealers will be kept out of the service tax net. However, by implication, the sale of foreign currency by dealers to individuals will attract the levy.

It was also pointed out that the services provided by the Reserve Bank of India (RBI) and foreign diplomatic mission will be kept out of the purview of the tax net.

At present, the service tax is levied on the basis of a positive list, meaning that the tax is levied on the specified services only.

The date for operation of the negative list, according to the budget papers, will be notified later.

The new proposal is expected to yield the government an additional Rs.18,660 crore in 2012-13. — PTI