State Governments are in the process of crystallising their views on the negative list of services referred to them by the Centre. They have been demanding that construction, luxury, air-conditioned restaurants and entertainment be included in the negative list with exclusive right to tax these services. A negative service tax list is widely expected to enhance the tax base and also reduce litigation. But it also needs to be ensured that there is no overlap between service tax and taxes imposed by the States. There is, however, high inter-State variation in the contribution of services to the respective Gross State Domestic Product (GSDP), say Dr Jose Sebastian and Ms Anitha Kumari L. of the Gulati Institute of Finance and Taxation (GIFT) based here.
Source: The Hindu Business Line
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