Finance Minister P. Chidambaram has included four new services under the tax net to marshal higher revenues while keeping the rates unchanged at 12 per cent for 2008-09.
The new services included for taxation are stock and commodity exchanges and clearing houses, asset management firms offering unit-linked insurance plan (ULIP) and customised software. The last among them being “the right to use goods, in cases where VAT in not payable.” Further the minister has revised the meaning of certain other categories of service providers such as money changers, persons running games of chance and tour operators using contract carriage vehicles were liable to pay service tax. Thereby, , purchase or sale of foreign currency, including money changing by an authorised dealer or an authorised money changer under banking and other financial service would be taxable services.The new services and changes are to be effective from a date to be notified after enactment of the Finance Bill 2008. Also, the threshold limit of tax exemption from the current level of Rs. 8 Lacs has been enhanced to 10 Lacs.