As per 2012 budgetary report, it is seeking that the government keep 22 services in the negative list as all kinds of economic activities, barring goods, money and immovable property as like construction, health, entertainment, restaurants, non-AC rail fares,transport, toll, betting and gambling.
All who are excepting to pay tax, now being charged on all 22 categories of services and impose 10 % on the rest. Govt. has clear stand on this step to add more services in the negative list of tax that is practiced globally and now introducing in India as part of the Goods and Services Tax (GST). It is expected that the negative list may introduce from the next fiscal (2012-13).
Adding more services in the negative list on which tax is charged, will hope to Centre to mop up Rs 82,000 crore for the current fiscal.
The government is trying to introduce the new GST regime, which to be keep levies like excise, service tax and states tax, like value-added tax, entry tax and purchase tax.
However at this time tax is levied on 119 services that make 63 per cent of India’s GDP. It is expected that making addition in services will help to widen the Centre’s gross tax revenue which estimates 8.7 per cent in the Budget for 2011-12.
But the major bottleneck that restricted to introduce a list of categories of services is of state’s opposition. They wanted to leave the area out of tax under their domain and also criticize to keep services like social welfare and public utilities, agriculture, education and health, in the negative list.
The Finance Minister held a meeting for consulting budgetary amendments in which industry agreed to expand the service tax fields but demand to come out the government with negative list.
The finance ministry officially said a few areas may not be in the negative list, but all the items mentioned in the Constitution’s Schedule II, such as entertainment, should be included in the negative list to ensure that the Centre cannot impose tax on them.
Meanwhile in this next fiscal all the tertiary activities that were not included last year would be enlisted in negative list that will help to increase tax collections upto 20-25 per cent and contribute in resolving the fiscal deficit.
