Burden of service tax
Service tax in the coming months and years will prove to be the silent killer of demand. Effective 1st June as such, service tax on many of our “essentials” has been hiked from 12.36% to 14%. This means, if the earlier 12.36% itself was pinching you, the pain will only get sharper.
First take a look at all that which will cost you more:
- Mobile Phones And Services, DTH
- Internet services
- Eating out and room rates
- Credit card bills and other banking services
- Rise in air and railway tariffs
- Taxi services
- Insurance
- Beauty parlour services, including spas and other saloons
- Courier services
- Cigarettes and other tobacco products
- Aerated, flavoured drinks and packaged water
- Music concerts
- Visits to theme parks
The worst news is that we still do not know if we will be slapped with a levy for Swachh Bharat tax, which could be clubbed in with your service tax ? And once GST comes in, service tax in some states could rise to 22 to 25% though the Govt, being kind-hearted that it is, is ok with 16-18%.
Basically almost each and every service you avail of will cost you more. As such even when rates were 12.36%, shops, owners asked whether you needed a bill? If you said, “NO” it meant that no service tax will be added to the bill amount and if you said, “yes” obviously, cost went up. No rocket science here, almost everyone opted for NO BILL. That means as tax goes up, collections will actually go down as more and more people will evade paying it.