States may levy tax on 67 services
The MOS Finance informed the Rajya Sabha that,
The issue of ‘Giving the States the right to collect Service Tax on selected services of intra-State nature’ is being discussed with the States in the context of working out a package for compensating the States for the revenue loss which will arise as a result of the proposed phasing out of the Central Sales Tax (CST). The issue under consideration is only that of the transfer of right to collect and appropriate the Service Tax proceeds from certain Services and not for transfer of right to levy the tax. The right to levy Service Tax continues to remain with the Central Government as per the Constitutional provisions. The Empowered Committee of State Finance Ministers (EC) has proposed transfer of 124 Services to the States (including 67 Services psently being taxed by the Central Government) considered to be of intra-State nature by the EC.
The proposal is only for transfer of selected Services of intra-State nature to the States.The proposal is under consideration of the Government.