Many services to get costlier from July 1

New Delhi, Jul 1: All services except those which are in the negative list will become expensive from Sunday with the implementation of the new service tax regime.

With the exception of 38 services, which figure in the negative list, all other activities would attract 12 per cent tax. The government had earlier decided to implement the negative list 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 or distribution by discoms have been kept in the negative list.

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

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

However, confusion prevails with regard to the imposition of service tax on rail freight and passenger fares.

Railway Minister Mukul Roy has said the Railways will not introduce service tax on freight and fare from July 1 and has written to Prime Minister Manmohan Singh, who is now looking after the Finance portfolio, in this regard.

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

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

Besides, services provided to the government, local authorities or a government authority for the repair and maintenance of an aircraft would also come in the negative list.

Also, services provided by advocates to other advocates and business entities up to a turnover of Rs. 10 lakh in the preceding financial year is exempt from service tax.

Services provided by way of public convenience such as provision of facilities of bathroom, washroom, urinals or toilets would be included in the negative list.

The other services which would be exempted from tax include auxiliary educational services and renting of immovable property by educational institutions in respect of education exempt from service tax.

Besides, services relating to works contract to a scheme under JNNURM or Rajiv Awas Yojana would also come under the negative list.

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.


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