New Delhi: In order to create certainty in levy of service tax, FICCI on Sunday said the government should come out with a negative list, meaning that all services which are not there would be taxed under the proposed GST regime.

"A well articulated negative list will clearly bring out the intentions of the policymakers, so as to what precisely is outside the tax net," FICCI said in a note to the finance ministry.

The ministry had sought feedback on the advantages and disadvantages of a negative list for services tax vis-à-vis the present practice of a positive list.

Currently, only a limited number of services come under the tax net. The government proposes to tax most of the services under the Goods and Service Tax (GST) regime.

 Talking about other advantages of the negative list approach, FICCI said it would widen tax base, reduce disputes on classification of services and compliance burden.

Cautioning that in positive list approach, the chances of different State GST administrations interpreting differently the various definitions of services would be higher as compared to negative list approach.

"This would lead to chaos and uncertainty in services taxation. Also, not having a comprehensive list of services would undermine the government's goal of reaching out for a
broad-base and an efficient GST model with a moderate tax level," it said.

Finance Minister Pranab Mukherjee in his Budget speech had said that many experts have argued that it will be desirable to tax services based on small negative list, so that many untapped sectors are bought into tax net.

The proposed GST would subsume most of the indirect taxes like excise duty and service tax at the central level and VAT on the state front, besides local levies.

A Constitution Amendment Bill is pending in Parliament, which seeks to pave the way for introduction of GST.

(Agencies)