Your child?s education at that elite school and your doctor at the private hospital is soon going to cost more. These services form a part of the six or so services short-listed by states to be brought in the service tax net as compensation for the revenue loss from the phase-out of central sales tax (CST). States had been given 44 new services which they could bring under the tax net along with 33 existing services transferred.
The final list includes services such as those provided by all private educational institutions, unaided health institutions and hospitals?except below-poverty-line cases?amusement parks and vendors who certify legal documents. But the focus would be on taxing private health and education.
Asim Dasgupta, chairman of the empowered committee of state finance ministers, said after a meeting on Saturday, ?We have chosen services in such a manner that it does not affect common people.? Education and health for common people will not be touched, he added. Similarly, artists or players as individuals would not be touched, he added.
The empowered panel will now review the short-listed services next month before submitting the list to the Centre. The Centre and each state will then pass a piece of legislation to enable states to tax these services at the rate of 12.36%. The tax will be collected by Central government agencies this fiscal.
The state finance ministers in the meeting also reviewed the revenue from value-added tax in the first quarter of the fiscal.