38 services exempted from negative list
17 other services specified by govt would also remain exempted
Advocate firms, construction works under some government schemes and transportation by cable cars would be exempted from service tax, when the negative list comes into effect from July 1.
The total number of exemptions would now rise from 34 to 38, Finance Minister Pranab Mukherjee said, while releasing the guidance paper on the new approach to service tax.
The new exemptions include those on certain support services in formal education, firms of advocates (similar to exemptions on individual advocates), construction works under the Jawaharlal Nehru National Urban Renewal Mission and the Rajiv Awas Yojna, monorail and metro construction and transportation by cable cars. Exemptions have also been announced on repair and maintenance of aircraft to the government, services provided by sub-contractors to primary contractors who are already exempted, services by public libraries and Employees State Insurance Corporation and services by way of public conveniences.
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The finance minister said the government had taken note of states’ concern that a few autonomous bodies set up under a special law might not be able to enjoy benefits available to government or local authorities. Accordingly, services provided by government authorities relating to functions entrusted to municipalities, along with a number of other services provided to such authorities, have also been exempted.
Under the negative list that comes into effect 18 years after the introduction of service tax in India, all services, except the 17 specified by the government, would be taxed. Other than these, 38 more would be exempted from tax. However, the government would have the power to do away with the exemption any time and tax these at the applicable rate, currently 12 per cent.
Mukherjee said while the service tax collection target for 2012-13 was Rs 1,24,000, crore, he was hopeful the new reform would act as a catalyst for the government to exceed the target significantly. “More than a revenue-garnering measure, the negative list is expected to make the administration of the tax simple, both for the department, as well as taxpayers, reduce litigation and usher a regime much closer to our eventual goal of Goods and Services Tax,” he said. The negative list would bring astrologers, matrimony agencies, actors, private tutors, boards of directors and a host of services under the tax ambit.