The government has opted to keep services such as health care facilities, education, non-AC train travel, metro and taxi out of the tax net.
Releasing the revised concept paper on ‘Taxation of Service based on Negative List' here on Friday, Central Board of Excise and Customs (CBEC) Chairman S.K. Goel said services provided by the government as also the private sector would attract tax at 10 per cent. Among the 10 services provided by the government and private sector entities are insurance, security, port and airport.
While the earlier draft proposed 27 services on the negative list, the revised concept paper has 22. However, the timing of implementation is yet to be finalised. “The negative list of services should be implemented immediately or we should wait... it is a matter of debate,” Mr. Goel said.
At present, the Centre imposes 10 per cent tax on 119 services. The CBEC has invited feedback, views and suggestions on the revised paper by December 15.
Included on the negative list in the revised draft are services such as funeral, burial and mortuary agencies, interest paid on bank deposits, services provided by independent journalists, dividend on investments and public passenger transport. Others on the list are copyright, dramatic and artistic work, services provided by recognised political parties, advertisements other than those published in newspapers and broadcast over radio or TV or displayed in other electronic media.
Explaining the basis of changes from the earlier draft, Mr. Goel said: “There has been some change in the way we define economic activities like hobbies, awards and religious activities. Hence we have reduced the list.”
While only a limited number of services are currently under the tax net, the government proposes to impose the levy on most of the services on the basis of a new negative list which will not be taxed.
Accordingly, the list excludes insurance and postal services other than post card, money orders and inland letters —where the government is competing with private companies. Also, business promotion or business support services, construction, trade fair, port or airport services and warehousing will not be on the negative list and thus be subject to tax. “Health fitness services like weight loss, speed post, and security services provided by government agencies like CISF will continue to attract the levy.”
Services account for the lion's share of nearly 63 per cent of the country's GDP (gross domestic product) and casting the tax net wider is expected to garner an additional 20 per cent revenue.
