The government has raised service tax from 12.36 percent to 14 percent with effect from June 1. The move will impact mobile phone subscribers and sectors such as railways, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.
Mobile operators have already been informing their subscribers about the hike. Railway passengers will also be impacted by the increased service tax. Fair for First Class and AC classes in passenger trains has gone up by by 0.5 per cent from June 1. "Currently, 3.7 per cent service tax is levied on train fares for AC Class, First Class and freight. This will go up to 4.2 per cent from June which means the rise is only 0.5 per cent," Economic Times quotes an official as saying.
According to reports, the service tax hike will ensure its smooth transition into a consolidated General Service Tax (GST), which is expected to be rolled out by April 2016. "To facilitate a smooth transition to levy of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cesses from 12.36 per cent to a consolidated rate of 14 per cent," Finance minister Arun Jaitley had said in his budget speech.
This year's budget has a lot of focus on the technology. Railway Budget 2015-16 envisages "SMS Alert" service in advance about the updated arrival/departure time of trains at starting or destination stations, integrated customer portal, Wi-Fi, On- line information on latest berth availability on running trains, an integrated mobile application including station navigation system, etc. Read Railway Budget 2015-16: Technology to play a crucial role