This was first introduced in the Finance Act 2012 with the view of mitigating litigation and prepare for eventual transition towards Goods and Services Tax (GST).

Presently, 17 specified services are provided under section 66D in the negative list. It includes services provided by government or local authority, services provided by Reserve Bank of India (RBI), specified services related to education, transmission or distribution of electricity, services relating to transportation of passengers among others.

During the Union Budget 2014-15, sale of advertisement in newspaper and other print media has been added to the negative list. On the other hand, service tax is re-imposed on online and mobile advertising, ATM, business directories etc and therefore they are removed from the negative list.

According to the Finance Minister, service tax has shown the highest tax growth in indirect tax regime. Therefore, the government has broadened the service tax base to collect Rs.7,525 crore in this financial year.

Indirect tax collection has shot up 4.6 per cent in April and June this year. This boost largely came from service tax which grew 19 per cent to Rs.38, 862 crore during this time.

However, the exclusion of online and mobile advertising from the negative list has hit the internet and mobile industry. Finance Minister decided to re-impose service tax in this sector keeping in mind the Prime Minister's commitment towards the growth of mobile and internet industry.

Click here to know how to pay service tax online?

Industry body Internet Mobile Association of India (IAMAI), that has Google and Facebook among its members fears that this move will increase the cost hampering the growth of the industry.

Conclusion

Any amendments in the negative list can be done only in the Parliament during the Budget session. Any modifications in the list is done based on the requirements in the industry or other other socio-economic demands.

GoodReturns.in