The Hindu Business Line : Chamber seeks negative list for service tax

THE Associated Chambers of Commerce and Industry of India (Assocham) has asked the Government to come out with a negative list of items on which service tax should not be imposed. It has also asked the Government to broad base the existing list of service tax from 81 to 95.

The services, identified by Assocham in its pre-Budget memorandum to the Ministry of Finance, include those by charitable institutions, basic and primary education, disaster management, Defence, computer literacy and hi-tech areas in the information technology sector.

The chamber has argued that services suggested in the negative list promote social cause and give a fillip to literacy drive and, hence, should not be taxed.

The chamber said that as the share of the services sector to GDP is well above 51 per cent, there should be a taxation system with sufficient fiscal incentives.

The chamber has recommended that life insurance companies be allowed to carry forward business losses incurred in the first eight assessment years until such time as the losses are fully set off against future profits.

The chamber has said that such a provision exists for banks and should be extended to insurance companies as well.

At present, products covered under the Information Technology Agreement are exempted from payment of education cess on the aggregate of the Customs duties, says the chamber. However, the said items are still charged education cess on the excise duty component. It is, therefore, suggested that the products covered by the Information Technology Agreement should be exempted from payment of education cess on the aggregate of the excise duties.

The chamber said that the Banking Cash Transaction Tax (BCTT) is levied on all cash withdrawals from a scheduled bank exceeding the specified amount per day without reference to the nature of activities or business of the accountholder.

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