Budget 2012 - Service Tax hiked & negative list proposed
16th March, 2012
Service Tax rate will stand increased to 12% from 1st April, 2012 as part of Union Budget 2012-13. The rate of 10% at present provided by way of exemption is being withdrawn. Specific services like Works Contract Service having composition rate will also attract Service Tax at a higher rate from next financial year. Money changing, lotteries and life insurance services will also be impacted by such tinkering of composition rate.
The Finance Ministry has also proposed to introduce negative list for taxing services. On implementation in the next few months, Service Tax will be payable on all services provided or agreed to be provided except 17 services. Exemptions will also be drastically reduced from the present 88 to 10 as per departmental clarification.
The Central Board of Excise & Customs plans to introduce new Place of Provision of Services Rules, 2012. Comments have been sought on these draft rules as part of the Guidance Paper released today.