Pay more for eating out, flying business-class from today
This summer going to museums, zoos and tiger reserves will get cheaper but for eating out, flying business-class and investing in mutual funds and chit funds you will have to pay more with the new service tax regime coming into effect starting Wednesday.india Updated: Apr 01, 2015 14:45 IST
This summer going to museums, zoos and tiger reserves will get cheaper but for eating out, flying business-class and investing in mutual funds and chit funds you will have to pay more with the new service tax regime coming into effect starting Wednesday.
Finance minister Arun Jaitley had came out with a host of proposals in the annual Budget last month to rationalise service tax, which is levied at an effective rate of 12.36%.
These also include raising the rate to 14%, but that will come into effect from a date to be notified later by the government after the passage of the finance bill by Parliament.
However, the proposals which have come into effect from April 1, 2015 include tax exemption granted to services like admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve.
Similarly, life insurance scheme Varishtha Pension Bima Yojna, ambulance service, retail packing of fruits and vegetables, too do not attract service tax levy.
On the other hand, air travel will become expensive as service tax will now be levied on 60% of the value of the ticket as against 40% presently.
"Till now, service tax was payable on 40% of the value of air transport of passenger for economy as well as higher classes for example business class. The abatement for classes other than economy is being reduced and service tax would be payable on 60% of the value of such higher classes," said the memorandum to the finance bill.
Services provided by Mutual Fund (MF) agents, marketing of lottery tickets, departmentally-run public telephone and free telephone calls from airport and hospitals will be subject to payment of service tax.
With regard to chit funds, the service tax will be paid by the chit fund foremen at full consideration received by way of fee, commission or any such amount.
They, however, would be entitled to claim Cenvat credit.
As part of the rationalisation programme, construction services will be exempted from payment of the levy from April 1, 2015 if the service is provided to the government with regard to historical monument, irrigation work, water supply and sewage treatment plant.
Exemption provided to construction, erection, commissioning or installation of original works pertaining to an airport or port will be withdrawn from April 1.
Services provided by folk or classical artists will be exempted from the levy provided the amount charged is less than Rs 1 lakh.
Service tax exemption to transportation of 'food stuff' by rail, or vessels or road will be limited to transportation of foodgrains, including rice and pulses, flours, milk and salt only.
The transport of other items, however, will become expensive.