Services taxation: FICCI for negative list approach

The Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested to the Finance Ministry that a ‘negative list' approach be adopted for services under the proposed Goods and Services Tax (GST) regime. A negative list rather than the existing positive list would be the right approach as it (negative list) brings in benefits like reduced exemptions, reduced disputes on categorisation of services, certainty in the levy of tax besides reduced compliance costs, the chamber said in a note to the Finance Ministry. The Finance Ministry had sought industry associations' views on what approach should India adopt for services under the proposed GST regime. Some experts feel that a ‘negative list' approach would be the most conducive one for India. The Centre is looking to implement a dual-GST system from April 1, 2012. A Constitutional amendment Bill has been introduced in Parliament to facilitate the introduction of this major tax reform. Under the proposed GST system, States are also to be empowered to levy GST on services. Currently, the Centre alone has the right to levy tax on services. To enable States to levy tax on services, the Constitution is sought to be amended. Also, the Centre will now get powers to levy GST up to the retail stage. Hitherto, the Centre could levy indirect tax only up to the manufacturing stage. - www.thehindubusinessline.com