Once again festive season is on our head. While next three weeks are going to bring in cheers and happiness to all of us, with festive mood and sentiments dominating the activities, such a celebration calls for spending a lot. Spending may not be that easy as we face mounting inflation across the board. High interest costs leading to higher EMIs on loans to be taken for buying consumer durables or a dream car or even a house. It calls for an extra liquidity which will have to be thought of.
While the levy of Service Tax on railway freight was introduced in the year 2006 but could not be enforced due to Railway Ministry being headed by one of the ruling party’s allies in the alliance, the levy of Service Tax on transport of passengers was introduced by Finance Act, 2012 w.e.f. 1st July, 2012 but was held in abeyance due to pressure from the Ministry of Railways for a period upto 30th September, 2012.
If hike in diesel prices and controlled supply of subsidized cooking gas cylinders created a political furor all over, the other reform measures such as allowing FDI in retail, substantial reduction in taxes on overseas borrowings by Indian Companies from 20% to 5% and final announcement of Rajiv Gandhi Equity Scheme (RGES) as announced in Budget brought much awaited frenzy on the stock markets.
Vide Notification No. 6/2005-ST dated 1.3.2005, a threshold exemption scheme was introduced by Finance Act, 2005 (effective from 1.4.2005) exempting from service tax aggregate value of taxable services not exceeding four lakh rupees received by the service provider during a financial year.
What a week it has been – first the Government infused a bitter pill on the citizens of the country by two non-populist steps in increasing diesel rates by five rupees a litre and substantially enhancing the prices of cooking gas over six cylinders in a year (three for the current year). This was followed by yet another bold decision of allowing foreign direct investment (FDI) in retail and aviation, which is being opposed by most political parties, besides ruling congress’s own allies and members.
While mutual funds provide a safe and desirable mode of investment for retail investors, they have not grown much due to lack of infrastructure on one hand and poor return to investors vis-à-vis their expectations. Mutual funds in India suffer from inadequate and non- expert distribution network as required, lack of penetration of products, lacunas in regulation of distribution network etc, besides investor protection issues.
With Service Tax regime migrating to negative list approach w.e.f. July 1, 2012, almost all the services except those in negative list (section 66D) and exempted services (Notification No. 25 2012-ST dated 20.06.2012) have become exigible to service tax .
New investment in equity shares of companies which comes through primary market is almost nil for last few two years or so. As such while the investors are deprived from investing in primary market, corporate also loose the opportunity to tap the market through public offerings.
On one hand where inflation is not coming under control and on the other, economic slowdown, globally as well as domestically, resulting in curb on income streams, it becomes imperative for people to work out for some additional source of income to either bridge the gap or earn more to continue to live the life as usual. This calls for some extra sources of income over and above regular sources.
Under the new service tax regime, any services not mentioned in the negative list will be subjected to Service Tax, if not otherwise exempt. If services are provided against a portion of the salary foregone by the staff, then it will be considered as having been made for a consideration and thus liable to tax.
