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Allaying the fears of India Inc, the CBEC today said that the concept of ‘negative list’ for services was being looked at only for the purposes of proposed Goods and Services tax (GST) regime.
There is no intention to bring this concept of ‘negative list’ for existing service tax, Mr S. Dutt Majumder, Chairman of the Central Board of Excise and Customs (CBEC), told a national conference on GST, organised by Assocham here on Friday.
The Finance Minister, Mr Pranab Mukherjee, had in his budget speech 2011-12 noted that some experts feel that taxing services based on a small negative list will be very conducive for a nationwide GST. He had then said that an informed public debate would be initiated on the subject to help the Government finalise the approach to GST.
Following this budget announcement, the Finance Ministry had written to apex industry chambers seeking their views on introduction of ‘negative list’ concept. Most chambers are yet to submit their formal views on the same. But chambers like FICCI and Assocham have indicated that they favour the negative list approach.
Given the uncertainty over GST becoming a reality from April 1, 2012, India Inc is worried that the Finance Ministry may look at introducing the ‘negative list’ approach in ensuing budget itself, even if the GST introduction process were to get delayed.
However, Corporate India is keen that the ‘negative list’ concept introduction coincides with the GST implementation. The Centre is looking to introduce a dual-GST system from April 1 next year.
Mr Majumder also told the conference that the CBEC was contemplating certain administrative measures to plug all loopholes in the service tax administration system. As against 15 lakh service tax registrants, only six lakh are filing returns, he said, adding that the CBEC was worried on this count.
At the same time, he noted that there was no need for any alarm or panic. He said that the situation did not warrant any increase in service tax rate or an increase in the number of services within the service tax net.
Currently, the Centre follows a positive list approach to services taxation. About 120 specified services are subject to service tax levy.
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