Finance ministry seeks views on `negative list' for service tax

The 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 Budget 2011.

Mukherjee had, in his Budget 2011, called for bringing almost all services within the tax net and for keeping the negative list to the bare minimum.

The issue of a negative list of services for tax purposes assumes importance in the context of the government's withdrawal of the service tax impost on hospital services in the face of stiff opposition to the proposal.

"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 finalise the approach to GST," Mukherjee had said in his Budget speech.

The ministry has now sought wider deliberations on the advantages and disadvantages of a negative vis a vis a positive list, the right approach for India and the international experience, issues arising from moving towards taxation of services based on negative list as also the definition of the term "service" itself.

It would also engage in discussions on the areas that would need to be exempted separately even after moving towards the proposed negative list and the revenue implication of moving towards negative.