The Finance Ministry will soon come out with a discussion paper to initiate an informed public debate on whether a negative list or a positive list approach would be the most appropriate one for taxation of services in the country.

This was stated by the Central Board of Excise and Customs (CBEC) Chairman, Mr S. Dutt Majumder, at a post-Budget meeting organised by the PHD Chamber of Commerce and Industry (PHDCCI) here on Wednesday.

“We don't have a Service Tax Act. Just as in goods side where there is a codified item-wise tariff for excise purpose, there is nothing on the service tax front. We are yet to decide whether negative list or positive list approach is best for us. So we intend to come out with a working paper and throw it open to public for a debate. Then we will take a call on what approach would be conducive for the rollout of GST,” Mr Majumder, said.

Although services account for 50-60 per cent of the country's gross domestic product (GDP), the contribution of service tax to the overall tax kitty was only little over 10 per cent, he said.

Mr Majumder said that there was a case to correct this “anomalous situation” gradually and it was with this intent that the service tax net was sought to be broad based in the latest Budget.

Many tax experts have argued that it will be desirable to tax services based on a small negative list so that the untapped sectors are brought to the service tax net.

The Centre has pegged the Budget estimate for service tax collection for 2011-12 at Rs 82,000 crore, reflecting a 20.58 per cent increase over budget estimate of Rs 68,000 crore for 2010-11.

>krsrivats@thehindu.co.in

comment COMMENT NOW