Public debate on negative list for tax on services initiated

The Finance Ministry on Friday sought to initiate a public debate on the issue of evolving a small negative list for tax on services, as was announced by Finance Minister Pranab Mukherjee in the course of his speech while presenting the budget for the current fiscal.

The net impact of a negative list would mean that barring those services contained in the list after detailed deliberation, all other services would come under the tax net and thereby broaden the service tax base when the Goods and Services Tax (GST) is rolled out as a combined levy in lieu of indirect taxes imposed by the Centre and the States.

In its announcement to set in motion the public debate initiative, a Finance Ministry statement said: “The main issues that are sought to be deliberated in the debate are advantages and disadvantages of a negative vis-a-vis a positive list; the right approach for India; the international experience of taxation of services based on negative list; important issues arising by moving towards the taxation of services based on negative list; definition of the term ‘service' and possible list of services that merit to be included in the negative list”.

Revenue implication

The statement noted that areas that would need to be exempted separately even after moving towards the proposed negative list and the revenue implication of moving towards negative list are also to be deliberated upon.

All comments and suggestions in this regard have been requested by June 15. (The Hindu)