The government has decided to roll out a new tax regime. According to this new norm residential construction of more than one unit will be taxed at 12% in the new tax rule. Service tax will be levied on other construction services like new work contracts of immovable property, construction for non-government for non-commercial purpose, private roads and renting to government and non-for-profit organisations.
Subsidies will be taxable when they influence unit price to the extent that the price changes in proportion to the amount given. Deficit subsidies will not be taxed, it said.
A final guidance paper on the Negative List, notified by the government this week, will be released by the finance ministry to help taxpayers know what is taxable and what is not, Central Board of Excise & Customs Chairman S K Goel said.
However, members of legislatures and local bodies; persons holding constitutional positions such as judges, President, Governor, and those holding position of chairperson, member or director of an entity established by thegovernment will not be taxed.
Some of the other services to be taxed in the new regime include transfer of goods by rail, banking services to government and services to RBI.
The finance ministry has set an ambitious target of over 30% growth in service tax revenue in 2012-13 over the revised estimate of Rs 95,000 crore in the current financial year, as the service tax rate has been increased by 2-12%, along with the introduction of the negative list.