Taxation Based on Negative List of Services
THE Finance Minister had said in Parliament, while presenting the Union Budget 2011 that he would initiate an informed public debate on the subject. Now the Government has released a concept paper to seek public opinion, mainly on:
++ Negative vs positive list: should the country adopt a negative list? What will be the proper timing: at the time of GST or even earlier?
++ How to define ‘service', for the purpose of taxation?
++ What are the services, which should be placed in the negative list?
++ How comprehensive the coverage should be while drawing the negative list? What should be the policy on taxation of important sectors e.g. education, health, public services, charitable and NGOs, infrastructure etc.?
++ What are the likely revenue implications?
Definition of Service: The Concept Paper suggests definition of service as: -
A “service” means anything, which does not constitute supply of goods, money or immovable property- and includes -
++ right to use an immovable property;
++ construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;
++ temporary transfer or permitting the use or enjoyment of any intellectual property right;
++ obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
++ service in relation to lease or hire of goods; and
++ right to enter any premises-
but excludes a supply -
++ by an employee to an employer in the course of or in relation to the employment of the person;
++ by a constitutional authority under the Indian Constitution or a member of an Indian legislature or a local self-government in that capacity;
++ that amounts to manufacture of excisable goods or is chargeable as part of the value of goods to a duty in terms of the provisions of Central Excise Act, 1944;
Comments, suggestions or feedback may be given by September 30, 2011 to Shobhit Jain, OSD (TRU) at shobhit.jain@nic.in