The Finance Ministry expects to begin the compilation of the negative list for service tax soon.  Negative list is a list of items on which tax will not be charged as compared to a positive list which the government already has. The government believes that service tax contribution to the overall tax kitty can be increased significantly if a negative list is prepared. “Deliberations are expected to start soon on the negative list,” Department of Revenue joint secretary V K Garg said here today on the sidelines of a workshop on service tax organised by the Bengal Chamber of Commerce and Industry .

The Finance Ministry may choose to get inputs and public opinion first and then prepare a discussion paper based on that. Garg, however, said, “I personally believe that getting a feedback on a consultation paper largely invites criticism and not suggestions and ideas.”

The Union budget hopes to collect service tax to the tune of Rs 82,000 crore from 121 services in the financial year 2011-12.

In 2010-11, the government collected service tax in excess of Rs 70,000 crore more than the revised target of Rs 69,400 crore.

Asked if the negative list will be prepared in sync with the rollout of Goods and Services Tax, Garg said it is not known yet.

After missing the original deadline of April, 2010, for a GST rollout, the government had proposed to introduce it in April, 2011.

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0 responses to “Preparation of negative list for service tax likely to start soon”

  1. S.L.GOYAL says:

    In my opinion negative list will be confusing and counter-productive:

    1. Organisations and individuals will try to use their influence and justifications
    to push their services into the negative list.
    2. A service provider will have to go through the negative list to check if his
    service is in this list or nor. If it does, he may try to call it differently so
    that it falls in the negative list.
    3. Service tax consultants will make good business by promising to advise clients
    that their service fits into the negative list. Litigation will increase.
    4. One clear positive list on services which should be taxable, Government being
    not too greedy to include all kinds of services in the taxable list, keeping
    it people-friendly, would in my opinion be the right way to go.

  2. mahadevan says:

    The proposed step to have a negative list is greatly welcome as contribution to win -win relations between the tax payer and tax collector.Disputes and differences would be minimized and tone up tax administration.

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