Negative List in Service Tax – Budget 2012

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-150×150.png” alt=”" width=”150″ height=”150″ />Dr. Manmohan Singh, the then Union Finance Minister, introduced the concept of Service Tax under Chapter V of the Finance Act 1994. Initially levied on just 3 services, the scope has been widened to more than115 services. At present, the levy of service tax is based on positive list. This means that only those services

are taxable which are specifically mentioned in taxable category of service under section 65(105) of Finance Act 1994. The services sector contributes around 60% to GDP, but tax revenues contribute less than 10%. Further, in order to facilitate transition to GST in near future concept of NEGATIVE LIST has been introduced in Budget 2012.

In the new system, all services, other than services specified in the negative list, provided or agreed to be provided in the taxable territory by a person to another would be taxed under section 66B. (Effective date notified as 01.07.2012)

The negative list concept is practiced globally and is proposed to be introduced in India as part of the goods and services tax (GST) regime. Movement towards the negative list will result in reducing nearly 290 definitions and descriptions in the Act to 54, and the exemptions from the existing 88 to 10.

Negative List of Services

The negative list shall comprise of the following services, namely:–

1. Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere—

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;

(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iii) transport of goods or passengers; or

(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities;

2. Services by the Reserve Bank of India;

3. Services by a foreign diplomatic mission located in India;

4. Services relating to agriculture by way of—

(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;

(ii) supply of farm labour;

(iii) processes carried out at an agricultural farm including tending, pruning, cutting,

harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;

(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;

(v) loading, unloading, packing, storage or warehousing of agricultural produce;

(vi) agricultural extension services;

(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce;

5. Trading of goods;

6. Any process amounting to manufacture or production of goods;

7. Selling of space or time slots for advertisements other than advertisements broadcast by radio or television;

8. Service by way of access to a road or a bridge on payment of toll charges;

9. Betting, gambling or lottery;

10. Admission to entertainment events or access to amusement facilities;

11. Transmission or distribution of electricity by an electricity transmission or distribution utility;

12. Services by way of—

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course;

13. Services by way of renting of residential dwelling for use as residence;

14. Services by way of—

(i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;

(ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers;

15. Service of transportation of passengers, with or without accompanied belongings, by—

(i) a stage carriage;

(ii) railways in a class other than—

(A) first class; or

(B) an airconditioned coach;

(iii) metro, monorail or tramway;

(iv) inland waterways;

(v) public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net; and

(vi) metered cabs, radio taxis or auto rickshaws;

16. Services by way of transportation of goods—

(i) by road except the services of—

(A) a goods transportation agency; or

(B) a courier agency;

(ii) by an aircraft or a vessel from a place outside India to the first customs station of landing in India; or

(iii) by inland waterways;

17. Funeral, burial, crematorium or mortuary services including transportation of the deceased.

With the introduction of a negative list for taxation of services in the Budget, the Union government has taken a giant step towards the goods and services tax (GST). While the introduction of the GST is still sometime away, the negative-list approach is expected to boost the Centre’s revenues and it is also expected that the number of litigations would go down.


CA PREETI SHARMA (Content Writer @ Takshila Learning)


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  1. Divyapuribansal

    Very informative article on negative list.

    1. Preetipuri


      1. Devanshsoni999

        The Article is very informative and useful.
        CA Devansh Soni

  2. Vgopalan1956

    Useful article. Thanks Preeti

  3. Arindra kumar Pandey

    Well precise,informative and handy presentation of the topic. Really remarkable . keep it up . God bless you. Arindra kumar pandey . 8826532409

    1. Preetipuri


  4. Rohit Singh

    Hello Mam,

    The article is good and very informative… But i have an question where the Reverse charge is applicable the, and the service receiver has liability to pay service tax to govt. on behalf of that person.

    if the person who received the service from Transporter in that case, the service receiver had paid not paid the service tax to govt. but the transporter had deposited the same, to Government, so if the assessing officer had issue the show cause notice in the name of service receiver, due to not deposited the service tax on behalf of Transporter…. now what cause of action to be follow by service receiver to proof he has no liability to pay service tax.

    Thanks & Regards,

    Rohit Singh

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