Arun Jaitley, Indian finance minister might bring a hike in tax rate to 16-18% in the new budget to goods and services tax in 2017. Things that will be affected with this rise will be airways, eating outlets, phone bills and other services. The rise is to attempt to take the rates closer to the proposed tax slabs for GST.
What is GST?
GST means Goods and Services Tax, which will include central and state taxes like excise duty, service tax and Value Added Tax.
When will the tax rolled out?
GST is set to roll out from July 1st 2017.
Jaitely had already raised service tax rate by 0.55 to 15% in the previous budget. And expected rise this year is 1% from the previous budget.
What are the benefits of hike in the budget?
A higher service tax will help the government to earn more revenues to meet the expenses. It might be a plan that contains the impact of demonetization. GST will be equally split between central and state government.
Service tax rate growing closer to GST will help consumers to avoid greater price shock over new national sales tax.
Exemptions of GST:
Services like primary healthcare, basic education are not covered by GST.
This will be the 3rd time that our finance minister, Arun Jaiteley is likely to rise service tax rates. In the year 2015, service tax was increased from 12.36% to 14% in the month of June. Also 0.5% tax on services was levied for “Swachh Bharat Cess”. Further he also imposed “Krishi Kalyan Cess” at 0.5% on all the services to take the tax to 15%.
Lets see in near future what these changes come up with.