The Finance Ministry expects revenue mop up from service tax to increase by 20-25 percent if and when the concept of negative list is implemented for taxation of services.
There is no decision yet on whether negative list should be adopted or positive list approach should be continued, the CBEC Chairman, Mr S Dutt Majumder said here on Monday.
“The debate is still open. We have not yet decided whether we should go with the concept of negative list. There is also possibility of continuing with the current positive list approach. Only after a decision on this can one look at whether to introduce negative list along with GST or not”, Mr Majumder told reporters on the sidelines of a Confederation of Indian Industry (CII) event here.
Mr Majumder noted that an overwhelming majority in industry are in favour of ‘negative list’ approach to services taxation. Under this concept, except for the mentioned services in the negative list, all other services will be subjected to service tax. Currently, India is adopting a positive list approach—a set of 117 specified services are subjected to service tax.
The Confederation of Indian Industry (CII) is in favour of a negative list approach, but wants this concept to be introduced only with the proposed dual goods and services tax (GST) system. However, there is thinking within the Finance Ministry that the concept of negative list could be tried without waiting for the GST system to be put in place. The final call on this matter will be taken by the Finance Minister, Mr Pranab Mukherjee.
The Finance Ministry had recently released a concept paper on negative list for services taxation. This paper is only on the limited question of whether there should be a negative list or positive list and if negative list what should be the contours.
Aided by point of taxation rules, services tax collections have recorded strong growth in the last two months. India’s indirect tax collections grew 23.9 percent in April-August this fiscal.