Presently, the Negative List covers specified educational services. These services are proposed to be omitted from the Negative List. However, as the same will be exempted via mega exemption notification the education institutes will not be affected. Consequently, the definition of ‘approved vocational education course’ is also proposed to be omitted from the Finance Act and is being incorporated in the mega exemption notification.
Another change proposed in the Negative List entry is in respect of “service of transportation of passengers”. The transportation of passengers by a stage carriage is proposed to be omitted from 01.06.2016. As a consequence, the above services become taxable. However, such services of transportation of passengers by a non-air-conditioned contract carriage will continue to be exempted by Notification No. 09/2016-ST dated 01.03.2016. The service of transportation of passengers by air-conditioned stage carriage is being taxed at the same level of abatement (60%) as applicable to the transportation of passengers by a contract carriage, with same conditions of non-availment of Cenvat credit.
The entry in the Negative List that covers services by way of transportation of goods by an aircraft or a vessel, from a place outside India up to the customs station of clearance is proposed to be omitted with effect from 1.06.2016. However such services by an aircraft will continue to be exempted by way of exemption Notification No. 09/2016-ST dated 01.03.2016. Thus transportation of goods via vessel will be taxable. The domestic shipping lines registered in India will pay service tax under forward charge while the services availed from foreign shipping line by a business entity located in India will get taxed under reverse charge at the hands of the business entity. The service tax so paid will be available as credit with the Indian manufacturer or service provider availing such services. It is clarified that service tax levied on such services shall not be part of value for custom duty purposes.
Thus in light of above changes the passenger transport in Air Conditioned Bus will be costlier. The import of goods will also be more expensive since there will be levy of Service Tax on activity of bringing the goods from outside India to Indian Customs.