by Shitanshu, March 23rd, 2012 In budget 2012 Finance minister has given income tax relief by increasing income tax slab & on other hand grabbed away amount more than this relief by increasing service tax by 2%. Budget 2012 delivered a big dissatisfaction to many due to rise in the service tax and excise duty from 10% to 12%.
If you are thinking that you will be able to draw more salary & save more due to income tax relief you are wrong. Defiantly you will see small take home difference but your household expense is about to increase due to rise in service tax. Service tax scope is widen up and covers most of household basket. Only 17 like essential education, public transport and services meant for agriculture, are now exempted from this tax bracket. Let’s check how this rise in service tax affects your budget.
Even to insure your life you have to pay more money. Service tax on the gross premium for the first year has been hiked from 1.5% to 3%, while subsequent premiums will be taxed at 1.5%.
Exemption of amount Rs 5,000 is given on preventive health checkup but on other hand much more amount is taken from your pocket, every visit to doctor & every diagnostic test will be cost you more due to increase in service tax liabilities. Even hike in excise duty and custom duty is goanna rise your expense as most of manufacturer will pass these tax expense to customer.
If you were planning to purchase property you are bit late. After the excise duty hike, all raw materials like steel, cement, electric and other finishing equipments are going to be more expensive, Hence property prices are surely going to rise, we have to wait and watch that it will rise how much? However, it will increase by at least two per cent
Be prepared to pay more on everything starting from cigarettes and branded cloths to car and imported items. Guru Mantra for this year is to spend minimum on services to control your household expense.
Service tax widening is a welcome step. However, this rise will bring inflationary effect.
Let us see 17 services which are exempted from service tax.
1. Electricity & Gas: For local utility bill you need not to pay service tax. We already pay other taxes on it.
2. Residential rent: House rent for residential purpose will not attract any service tax.
3. Services by the Government or local authorities: These will include such services like getting a passport, a driving license, paying municipal taxes, car registration fees, police fines etc. Service tax will still be applicable on speed, and life insurance bought from a post office,
airport services etc.
4. Services by the Reserve Bank of India.
5. Trading.
6. Manufacturing of goods Service Tax is not applicable but there is already the excise duty, customs duty and VAT on this.
7. Foreign consulates and embassies in India.
8. Agricultural services This includes harvesting, planting, or warehousing services, renting of either vacant agricultural land or machinery,
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