Monday, 2 July 2012

New Service Tax regime to make speed post, holidaying costlier

Speed post and express parcel service of post office, earnings of TV and theatre artists will come under the 12 per cent service tax bracket from July1 with the government embracing the new Service Tax regime based on negative list.
From now, with the exception of 38 services, which figure in the negative list, all other activities would attract 12 per cent tax.
Besides, air tickets and overseas holiday package bought from online portals would be subject to the levy. Also tests like GMAT and GRE would get more expensive as the institutions which conduct these exams would be subject to tax. However, entrance tests of institutions such as IITs and IIMs will be exempted from the levy.
While private tuition providers will now be subject to service tax if their annual turnover exceeds Rs 10 lakh, although the tax will not be levied on school, university education and approved vocational courses.
As per the negative list, services like metered taxis, auto rickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and electricity transmission or distribution by discoms have been kept in the negative list.
Other important services which will not attract the tax include funeral, burial, mutate services and transport of deceased.
However, rail freight and passenger fares are kept out of the ambit for the time being after Railway Minister, Mr Mukul Roy, wrote to Prime Minister, Mr Manmohan Singh, who is now looking after the finance portfolio, requesting him not to introduce service tax on passenger fare and freight traffic from July 1.