Union Budget 2015: Service tax may now cover coal, spectrum auctions

The government is likely to enable a provision in Financial Bill to levy service tax on services by government to business entities. According to sources, the services may include coal as well as spectrum auctions. The list of government services that will fall under service tax is not yet decided.

Sources further tell CNBC-TV18 that the amendments will come into effect after passage of the Finance Bill with government yet to notify the date. The government has also pruned exemptions under the negative list for service tax in an attempt to broaden tax base.

The finance ministry said not all government services will fall under service tax net. The ministry is also believed to be sensitive of the impact on sectors and will therefore, analyse before taking any decision.  The ministry said it doesn’t want to take ‘people by surprise’ but is looking for stability in the tax policy. The Swachh Bharat cess which is up to 2 percent could be lowered and may not be levied on all services. Service tax rate will go up further if Swachh Bharat cess is levied.