“The option of raising service tax and excise duty on standard non-petroleum goods from 12% to 14% is being examined,” a source told HT.
These tax rationalisation steps are being examined as a precursor to the eventual rollout of a nationwide goods and services tax (GST) that will replace a welter of local levies such as value- added tax (VAT) and octroi by a single tax. The measure is expected to be part of the budget proposals for financial year 2013-14.
If implemented, the excise duty hike will restore the tax rate to pre-2008 levels when the government slashed it to 8% in a phased manner amid a global economic slowdown.
At 14%, service tax, however, will be the highest ever since it was introduced 19 years ago.