|Chennai||Rs. 24470.00 (1.37%)|
|Mumbai||Rs. 24900.00 (0.97%)|
|Delhi||Rs. 24200.00 (1.26%)|
|Kolkata||Rs. 24160.00 (0%)|
|Kerala||Rs. 24000.00 (0.63%)|
|Bangalore||Rs. 23800.00 (0%)|
|Hyderabad||Rs. 24140.00 (1.17%)|
The unofficial name of exemption list Notification No.25/2012-service tax dated 20.6.2012 of Service Tax is Mega Exemption List. Such a big list of exemptions is quite contrary to the idea of a comprehensive service tax. If the service tax is supposed to be comprehensive, which was the design propounded in the Concept Paper, it should have only a Negative List and not an exemption list. However, the government thought it better to have an exemptions list also since the Negative List covers only those services, which are not taxable at all and exemptions list covers those services which are taxable but are exempted due to contingencies such as pressures from lobbies or difficulty in collection.
Negative List cannot be altered except in the Budget but exemptions can be given or withdrawn any time. So, Negative List should contain items which are usually never taxed. Even if we accept it on principle, in effect, this has not been done. And exemptions have been given too generously. It was announced in the last Budget that simplification has been done as the number of exemptions has been reduced from 88 to 10. This is misleading because the mega exemption alone contains 39 services with sub-headings having between two and 17 items. It has also got 30 extra definitions (apart from the definitions section in the Act). So the story of simplification is highly exaggerated.
The mega exemptions have items and sub items which total up to more than hundred. So the complications continue as before in interpreting the exemptions.
This treatise aims to suggest remedy by removing these defects as below.
I have given some examples here but Revenue should examine all exemptions and try to remove as many as possible. The Negative List should only contain services which are usually never taxed like those of Government, Reserve Bank, agriculture, United Nations. All other items in the Negative List should be removed to the exemption list which itself should be pruned mercilessly to make simplicity the main virtue.