New Delhi: Speed post and express parcel service of post office, earnings of TV and theatre artists will come under the 12 percent service tax bracket from July 1 with the government embracing the new Service Tax regime based on negative list.

From now, with the exception of 38 services, which figure in the negative list, all other activities would attract 12 percent tax. Besides, air tickets and overseas holiday package bought from online portals would be subject to the levy. Also tests like GMAT and GRE would get more expensive as the institutions which conduct these exams would be subject to tax. However, entrance tests of institutions such as IITs and IIMs will be exempted from the levy.

While private tuition providers will now be subject to service tax if their annual turnover exceeds Rs 10 lakh, although the tax will not be levied on school, university education and approved vocational courses.

As per the negative list, services like metered taxis, auto rickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and electricity transmission or distribution by discoms have been kept in the negative list.

Other important services which will not attract the tax include funeral, burial, mutate services and transport of deceased.

The government has widened the definition of 'Services' to bring in more activities under the tax net. Till now, 119 services that come under 'positive list' are subject to the levy.

The switch-over to a negative list would help in smooth transition towards the Goods and Service Tax (GST) regime and would also expand the tax base. This is also expected to increase the Centre's Service Tax collection to Rs 1.24 lakh crore in 2012-13, up from Rs 97,000 crore in the last fiscal

Besides, services provided to the government, local authorities or a government authority for the repair and maintenance of an aircraft would also come in the negative list.

Also, services provided by advocates to other advocates and business entities up to a turnover of Rs 10 lakh in the preceding financial year is exempt from service tax.

Services provided by way of public convenience such as provision of facilities of bathroom, washroom, urinals or toilets would be included in the negative list.

The other services which would be exempted from tax include auxiliary educational services and renting of immovable property by educational institutions in respect of education exempt from service tax.

Besides, services relating to works contract to a scheme under JNNURM or Rajiv Awas Yojana would also come under the negative list.

Hike in train fares not effected from July 1

A hike in railway fares under the new service tax regime, was not effected due to a confusion over whether the Railways have been exempted from it, officials said.

"No hike has been effected on rail passenger fares from July 1," said a Railway Ministry official.

If brought into force, the hike would have been about 3.6 percent in all AC classes and first class. While transport of goods or passengers have been kept in the negative list, Railway officials said they are assuming Railways are under this category as they have received no communication from Finance Ministry that Railways have been exempted too.

They said Roy, who is expected here tomorrow, could clear the confusion. Railway Minister Mukul Roy had on last Friday requested Prime Minister Manmohan Singh, looking after the Finance portfolio, not to introduce service tax on passenger fare and freight traffic from Sunday expressing confidence that he would realise the situation and accept his request.

Earlier, he had also requested former Finance Minister Pranab Mukherjee to exempt Railways from paying service tax.

Railways will have to bear close to Rs 6000 crore if it decided against passing on the service tax burden to the passengers.

Service tax on passenger travel and freight was introduced in the general budget for 2009-10, but was kept on hold due to the then Railway Minister Mamata Banerjee's opposition.

The exemption has been extended since then on a quarterly basis but this time the Finance Ministry has decided to exclude freight charges and AC rail travel from the negative list, which gets service tax exemption.

With freight and passenger fares enjoying a 70 percent subsidy, the impact on the increase in freight charges and fares of First Class and AC-I, AC-II and AC-III will be 3.6 percent.


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