Service tax: Negative list approach not a revenue raising measure
September, 21st 2011
The Finance Ministry has said that the exercise of introducing a negative list for taxation of services was not primarily being done to mobilise more revenues or tax people to a greater extent.
With service tax mop up expected to grow by 20-25 per cent on implementation of negative list, many stakeholders see this proposed introduction as a revenue raising measure.
A large part of the tax you might collect as service tax (under the negative list approach) would be available as credit with another section of services sector or in the manufacturing sector. It's not that simply because the figures are going up, that is the net amount Government will be getting. That's not true, Mr V.K. Garg, Joint Secretary, CBEC, said at a Phdcci conference on Negative List of Services and its implications' here today.
A concept paper on negative list of services is currently out in the public domain for an informed debate. The last date for feedback is September 30. The Finance Ministry intends to come up with a new paper after factoring in the public response to the recently released concept paper.
The Government had through the concept paper sought to ascertain whether the negative list was the right approach to implement service tax law.
The whole world has done this (negative list). Why should we not be able to do this?, Mr Garg said.
At the same time, he noted that the concept paper was not cast in stone and that there was scope for additions and deletions.