Budget 2012: Tax All Except 35 Services, States Ask Centre

The states have finalized 35 services that should be included in the negative list service tax regime; means the services out of the list would be taxed. It has no objection to the Centre widening its service tax net in the forth coming union budget. The 35 services approved by states include ambulance, beauty parlors, marriage halls, interest on bank deposits, leasing of vehicles and machines and so on are kept out of the ambit of the levy.

With a broad agreement emerging between the states and the Centre, Finance Minister on March 16, may announce coverage of most of the services used by individuals and business, in the Budget 2012-13. The Empowered Committee of State Finance Ministers favors the negative list with 35 items approved by States can be implemented from April 1, 2012.

Earlier, the Centre had released a negative list containing 22 services. At present, the tax at the rate of 10% is levied on 119 services. For the current fiscal, the Centre may mop up Rs.82,000 crore from this levy. As of now with the current prices, the contribution from services during 2010-11 comes at about Rs.50 lakh crore. However, the total collection from service-tax during 2010-11 was around Rs.70,000 crore.

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