The government on Wednesday added services by lawyers and 13 other items to the list of services exempt from the 12% tax as the nation migrates to a more comprehensive taxation of services from July 1 when all but a few listed ones will come under the tax net. The wider list of tax exempt services is in addition to a negative list of 17 services that remain unchanged.
The expanded ‘exempt list of services’ has included the services rendered by advocates to other advocates and to business entities up to a turnover of Rs 10 lakh. The same benefit is also extended to a firm of advocates. The negative list of services had not spared lawyers from service tax earlier. Unlike the ‘exempt list of services’,the negative list of 17 services that are also outside the purview of service tax requires Parliamentary sanction for any revision.
By switching from taxing a number of specified services to taxing all but those in the negative and exemption list of services,the government hopes collect more than the targeted Rs 1,24,000 crore service tax this fiscal.
Finance minister Pranab Mukherjee,who released an education guide on taxation of services here,said that with these additions,the number of exemptions has gone up to 38.
The new exemptions include services rendered by advocates to other advocates and business entities with a maximum of Rs 10 lakh turnover,services related to the Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojna,building of monorail or metro projects,auxiliary educational services and transportation by rope way,cable car or air-tram way. Services of public libraries,services by Employees State Insurance Corporation (ESIC) to those governed under the Employees Insurance Act and services by way of transfer of a going concern are also exempt from the tax.
With the migration from a positive list of taxable services to a negative list of exemptions from July 1,the government hopes to widen the service tax base and increase the share of this levy in the overall revenue collection. The government also wants to align the excise duty that is levied on production of goods with the tax on services in light of the country’s proposed transition to a Goods and Service Tax (GST).
The 17 services in the negative list includes those provided by the government or local authorities except a few where they compete with the private sector,pre-school and school education,agriculture services,renting of residence,entertainment and amusement services and public transportation.
The original list of exempt services included services provided by charities,religious persons,sports persons and performing artists in folk and classical arts.