Millennium Post

Services under tax net from today

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 will attract 12 per cent tax. The government had earlier decided to implement the negative list from 1 July.

As per the negative list, services like metered taxis, auto rickshaws, 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 from Sunday. The railway minister Mukul Roy has said that railways will not introduce service tax on freight and fare from 1 July 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.
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