Budget 2012: Impact on services sector
   

Budget 2012: Impact on services sector

Last Updated: Saturday, March 17, 2012, 08:49
Comments 7  
Budget 2012: Impact on services sector New Delhi: Telephone use, eat-outs and other activities will cost more as Finance Minister Pranab Mukherjee Friday proposed increasing the service tax rate to 12 percent from 10 percent and introducing a negative list aimed at bringing more services under the tax net.

"I propose to raise the service tax rate from 10 percent to 12 percent ... My proposals from service tax are expected to yield an additional revenue of Rs 18,660 crore," Mukherjee said while presenting the Budget for 2012-13.

The government has estimated to collect Rs 95,000 crore from service tax in the current fiscal and has pegged the next year's target at Rs 1.24 lakh crore.

"I propose to tax all services except those in the negative list. The list comprises 17 heads and has been drawn up, keeping in view the federal nature of our polity, the
best international practices and our socio-economic requirements," Mukherjee said.

The services not under the negative list will attract 12 percent service tax.

Last year, the Centre had proposed a negative list containing 22 services. Tax at the rate of 10 percent is currently levied on 119 services.

The services that comprise the negative list include those provided by the government or local authorities, except a few specified services where they compete with private sector.

The list also includes pre-school and school education, recognised education at higher levels and approved vocational education, renting of residential dwellings, entertainment and amusement services and a large part of public transportation including metered cabs, and agriculture and animal husbandry.

The negative list concept is practiced globally and is proposed to be introduced in India as part of the goods and services tax (GST) regime.

"Movement towards the negative list will result in reducing nearly 290 definitions and descriptions in the Act to 54, and the exemptions from the existing 88 to 10," Mukherjee said.

He also announced a list of services which are exempted from service tax. This include health care, services provided by charities, religious persons, performing artists in folk, sportspersons and classical arts.

Also individual advocates providing services to non-business entities, independent journalists, and services by way of animal care or car parking will be exempt from tax.

Further, Mukherjee also proposed to exempt the film industry from service tax on copy rights, relating to recording of cinematographic films.

On service tax on life insurance services, if the entire premium is not towards risk cover, then the first year's premium shall be taxed at the rate of 3 percent.

Subsequent premia shall attract tax at the rate of 1.5 percent, he said adding availment of full cenvat credit is being allowed.

Transport of passengers embarking in India for domestic and international journey by air would attract an ad-valorem rate of 12 percent, with abatement of 60 percent in case of economy travel.

The dual rate structure of maximum service tax of Rs 150 and Rs 750 in case of economy class travel has also been proposed in the Budget.

At current prices, the contribution from services during 2010-11 works out to about Rs 50 lakh crore. However, the total collection from service tax during 2010-11 was over Rs 70,000 crore.

PTI
First Published: Friday, March 16, 2012, 18:48
 
 
Post Your Comment
 Your comment(s) on this article
Please send complete details of supporting documents like notification / Circular on Service tax applicable on Industrial waste Management services from 1st July 2012
Hanumantha Rao M - Hyderabad
Please send exampted list of Service Tax as per new rules
P Dutta - New Delhi
residence properities unter service tax or not
BABUBHAI - AHMEDBAD
plz. informe me
mukesh bhardwaj - patna
Plz elaborate 17 Negative List Service Which are exempt
Shah krupa - Ahmedabad
what are the units affect from service tax coverage
raj -
Please tell me the effective date of increased rate of service tax
AMIT JAIN - LUDHIANA
1 
 
 
     
  Name
  Place
  Email
  Comment
TERMS OF USE:
The views represented here are not neccesarily endorsed by www.zeenews.com and its allied websites. All messages will be moderated and no message that has inflammatory, abusive, derogatory language or any language deemed unfit for publication by the editor will be displayed. Though it will be endeavoured that as many messages as possible be displayed, there will be time lag between the submission and publication of the messages. The website reserves the right to publish or reject any message.


 
latest videos  
Q&A With fm Read More »
Budget will provide breather to aam aadmi: Pranab

FM expressed confidence that the policy road map prescribed in the Budget will steer the course of the economy.

opinion poll
Will the Budget be able to solve India`s deficit woes?
Yes
No
Maybe
zee exclusive Read More »
A survivor’s Budget, at best!

As Pranab Mukherjee read out his Budget speech the politician in him was right up front.

Education not a priority in the Budget 2012-13 Union Budget 2012: What does it offer to women?
   
Food security still a distant dream Measly spending on major social sectors
 
Budget Plus