The Finance Ministry has initiated a public debate on the issue of a negative list for taxation of services. The Government is keen to ascertain whether a negative list or a positive list approach would be the most appropriate one for taxation of services.
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 Finance Ministry has now asked the apex industry associations — CII, FICCI, Assocham, PHDCCI and academic institutions such as the National Institute of Public Finance and Policy (NIPFP) — to participate and also anchor the public debate on the subject. All comments and suggestions have been requested by June 15.
The main issues that are sought to be deliberated in the debate are advantages and disadvantages of a negative vis-à-vis a positive list, the right approach for India, the international experience of taxation of services based on negative list and important issues arising by moving towards the taxation of services based on negative list.
The Finance Ministry also wants the deliberations to include issues such as definition of the term “service” and possible list of services that need to be included in the negative list.
Areas that would need to be exempted separately even after moving towards the proposed negative list and the revenue implications of moving towards negative list are also to be deliberated upon, the Finance Ministry said in a statement here.
The Directorate General of Service Tax (DGST) has been appointed as the nodal agency for the in-house debate and consultation on the subject by calling for the comments from field formations. A concept paper on the subject is proposed to be drafted after the feedback from the stakeholders.
krsrivats@thehindu.co.in