No service tax on Metro, taxi, second-class rail travel

New Delhi, Mar 17: 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, include 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 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 very 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).

PTI