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Finance Ministry initiates public debate on negative list for taxation of services


May 6, 2011 - New Delhi

Union Finance Ministry has initiated a public debate on the issue of a negative list for taxation of services as announced by Finance Minister Pranab Mukherjee in his 2011 Budget.

Mukherjee in his 2011 Budget speech had said: "Many experts have argued that it will be desirable to tax services based on a small negative list, so that many untapped sectors are brought into the tax net. Such an approach will be very conducive for a nationwide GST."

"I propose to initiate an informed public debate on the subject to help us finalize the approach to GST," he had added.

The main issues that are sought to be deliberated in the debate are advantages and disadvantages of a negative vis-a-vis a positive list, the right approach for India, the international experience of taxation of services based on negative list, important issues arising by moving towards the taxation of services based on negative list, definition of the term "service" and possible list of services that merit 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 implication of moving towards negative list are also to be deliberated upon.

Major industry federations and confederations like FICCI, ASSOCHAM, PHDCCI and CII and academic institutions like NIPFP have been requested to participate and also anchor the public debate on the subject.

All comments and suggestions regarding the issue have been requested by June 15.

The Directorate General of Service Tax 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.

ANI

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