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High-end rail travel, homes may turn dearer

business Updated: Jan 23, 2012 22:46 IST
HT Correspondent

Travelling in Indian Railways’ new air-conditioned coaches may get costlier. Your house rent, if you are paying rent in excess of Rs 1 lakh a month, may also go up.

These are among a host of other services that could come under the service tax net as finance minister Pranab Mukherjee is likely to announce a “negative list” in the budget for 2012-13.

This will significantly widen the number of taxable services from the current list of 117. http://www.hindustantimes.com/Images/HTEditImages/Images/24_01_biz2.jpg

The Centre will impose tax on all services except those that feature on the “negative list.” Capitation fees or donations in educational institutes, speedpost and security services provided by government agencies like CISF are among the many services that may now come under the service tax regime.

Funeral, burial and mortuary agencies, interest paid on deposits by bank, services provided by independent journalists, dividend on investments, and transport of passengers in public transport, will, however, be excluded from paying tax Earlier this month, the empowered committee of state finance ministers headed by Bihar deputy chief minister Sushil Modi broadly agreed to the Centre’s proposal to adopt a “negative list” of services.

The state governments, however, want the negative list to be widened to include areas such as construction, restaurants, transport of goods by road and inland waterways, beauty parlours etc that would give the states the exclusive rights to tax these services that are administered locally and have minimal inter-state implications.

In November, the finance ministry had issued a revised concept paper proposing that most services except 22 categories listed on the “negative list” be brought under the goods and services tax (GST) , which the government plans to introduce in April next year.

At present, only the Centre enjoys the right to levy service tax. The GST Bill, which was introduced in Parliament in March last year, seeks to amend the Constitution to empower the states to impose service tax.