The Telegraph
Sunday , July 1 , 2012
Since 1st March, 1999
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Services become dearer

New Delhi, June 30 (PTI): All services, except those on the negative list, will become expensive from tomorrow with the implementation of the new service tax regime.

Excluding 38 services, which are on the negative list, all other activities will attract a 12 per cent tax. The government had decided to bring the negative list in force from July 1.

Services such as metered taxis, auto rickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and electricity transmission or distribution by discoms have been kept on the negative list.

Other important services which will not attract the tax include funeral, burial, mutate services and transport of the deceased.

Coaching classes and training institutions will come under the tax net, though there will be no levy on school, university education and approved vocational courses.

Besides, services provided to the government, local authorities or a government authority for the repair and maintenance of an aircraft would be on the negative list.

However, confusion prevails on the imposition of service tax on rail freight and passenger fares.

Railway minister Mukul Roy has said service tax will not be levied on freight and fare from July 1 and has written to Prime Minister Manmohan Singh, who is now looking after the finance portfolio, in this regard.

The government has widened the definition of services to bring in more activities under the tax net. Till now, 119 services that come under the positive list are subject to the levy.

The new approach to taxation of services is seen as a step closer towards the introduction of goods and services tax.

The finance ministry has set a target of Rs 1.24 lakh crore from service tax in the current fiscal, higher than Rs 97,000 crore mopped up in 2011-12.