While Union Budget 2015 is said to be a bold budget, it came with mixed announcements, some of which are positive for the pockets while some are not. Finance Minister Arun Jaitley also announced increase in Service Tax from 12.36% to 14%. Increasing expenditure of consumers, the new Service Tax @14% on services has taken effect from June 1, 2015.
Though the change in Service Tax digits look quite marginal, the new Service Tax is going to make you shell out more money for services such as groceries, phone bills, railways, insurance, beauty and more.
Read on to find out what is Service Tax, applicability of Service Tax and how Service Tax @14% is going to impact your pocket.
What Is Service Tax?
Service Tax is a Tax which is levied on all services except the services which fall under negative list. This tax is levied by Central Government of India.
Applicability Of Service Tax
From June 1,2015, Service Tax is applicable to all services except a few specified in negative list. The services for which Service Tax needs to be paid include restaurants bills, phone bills, insurance, railways, airlines, advertising, credit cards and more.
How New Service Tax @14% Will Impact Your Pocket?
- Credit cards: Those who use credit cards will have to spend more money now. Service Tax is levied on interest charged on credit cards and hence more load on your pockets. Try to make less use of credit cards to save this expense.
- Dining: Restaurant bill will also become costlier
- Phone Bills: The new increased Service Tax is going to impact your phone bills. For instance, if you pay Rs. 1,000 monthly bill, the 14% Service Tax will add up Rs. 140 more to it.
- Banking: Banks levy Service Tax on banking services like funds transfer, ATM processing, maintenance of bank accounts etc. except income from loans and advances. Thus increase in Service Tax will increase the tax levied by banks.
- Insurance: The premium which you pay for insurances will be impacted.
- Online Shopping: Online shopping will become expensive. The revised Service Tax is also applicable to e-commerce portals. Thus, e-commerce products and their shipping will be more costlier now.
- Travelling: Fares of airlines and railway tickets will be increased.
- Courier Services: Courier companies also levy Service Tax on couriers. The courier bill will thus, be now costlier than before due to increased Service Tax.
The new Service Tax @14% will certainly impact your pockets severely. What are your views on increase in Service Tax from 12.36% to 14%. Let us know in the comments below!
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Also Read: Highlights Of Railway Budget 2015-16