Is India ready for negative list to tax services?

Deepa

I agree with your view that once the unified GST is implemented,we can think of negative list to tax services.I know people will oppose this as the cost will increase but the logic is reverse of what happens in tax benefits. A firm operating in a SEZ has the benefit of not paying tax for a particular period of time-this form of non taxation is based on location hence taxing something on airport is quite feasible..

The definition of airport and port services includes all services provided within the physical jurisdiction of the airport and port, respectively, irrespective of whether or not they are defined as a ‘taxable service’ under any other sub heading in the service tax legislation. The definition becomes ambiguous and all-encompassing as the word 'service' alone has not been defined in the service tax law. The process has been marred by litigation with stakeholders challenging the very logic behind imposition of tax on a number of services. For Indians to embrace a tax on a service that they have availed of so far without paying one is not easy. The negative list approach may thus lead to further increase in litigation. Therefore, to make more acceptable, the government should continue with the positive list approach of taxing services. A switchover over to negative list can happen at a later date in the second phase of GST.