The government should exempt services provided for storage of agricultural produce like warehouse management and laboratory testing from service tax, industry body Assocham said today.
"Services like warehouse management, security, laboratory testing and others that are essential to secure storage of agri-produce should be included in the negative list or in the list of exempted services," Assocham said in its pre-budget memorandum submitted to the Finance Ministry.
Besides, the chamber suggested that the government should exempt services like leasing of land and agricultural equipment, agri-extension services and others provided in rural areas or marketing agricultural products from service tax.
In order to prevent misuse of exemptions, appropriate rules can be framed for certification of services provided in rural areas by governmental bodies like the gram panchayats, village post-master and others, it said.
"The government should partner with private sector for developing market infrastructure in rural areas by providing appropriate incentives and exemption from service tax in respect of input services that are used for strengthening infrastructure in rural markets," Assocham Secretary General D S Rawat said.
Besides, the industry body suggested the government to cover the processing of whole pulses into split pulses under the negative list of service tax.
"Levy of service tax on such processing activities that are carried out in factories adds to the high prices of pulses, which is a staple diet for common man," it said.
Currently, negative list of services includes processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun-drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such operations which do not alter the essential characteristics of agricultural produce but makes it only marketable for primary market, Assocham said.
