New Delhi, May 06: Amid opposition from AIADMK, the Lok Sabha today approved a bill to amend the constitution to empower both the centre and states to levy and appropriate tax on services.
The 95th constitution amendment bill aimed at augmenting their revenues to compensate any loss with the implementation of value added tax was voted 333 to 10 in the division. The AIADMK opposed the measure maintaining the legislation fell within the domain of the states.
The amendment has been necessitated to bring taxes on services in the seventh schedule of the constitution. The service sector accounted 48.5 per cent of the country's GDP and the sector offered enormous potential for revenue, estimated at Rs 40,000 crore annually. Replying to a brief discussion, finance minister Jaswant Singh said the proposed amendment would help in significant augmentation of revenues of the states and pave the way for eventual inclusion of services within the purview of state-level VAT. A separate service tax bill would have to be enacted by parliament to operationalise the powers of the centre to levy appropriate tax on services and states on the remaining services.
At present, union government alone is levying and collecting tax on 51 services netting Rs 3,227 crore in 2001-02.
The Constitution Amendment Bill was introduced in the Rajya Sabha today. Bureau Report