Tax relief for more services

Fourteen more services have been put on the negative list for the purpose of taxes as the government streamlines the administrative procedures of this vital revenue source in its bid to usher in a goods and service tax regime in the country.

The negative list includes those services that will not pay the 12 per cent levy. The new entrants to the roster that take the total list to 38 include advocates serving entities with a turnover of up to Rs 10 lakh, and libraries and entities providing public conveniences. The new negative tax regime will come into effect from next month.

According to the guidance note on the implementation of the negative list of service tax released by finance minister Pranab Mukherjee today, the entities providing merger and acquisition services, too, will be kept out of the ambit of the tax net.

“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,” Mukherjee said while releasing a 107-page book — Taxation of service: An Education Guide.

Mukherjee said that with the expansion of the service tax base, it would be possible for “the Central Board of Excise and Customs to exceed the collection target of Rs 1.24 lakh crore in the current fiscal”.

The government has collected Rs 97,000 crore by way of service tax in the last financial year. For the current year, the government has hiked the service tax rate by 2 per cent to 12 per cent.

According to the service tax guide, the 14 new services, which will be exempted from payment of tax include services provided to the government, local authorities or a government authority for the repair and maintenance of an aircraft.

It said services provided by way of public convenience such as provision of facilities of bathrooms, washrooms, urinals or toilets would be on the list.

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