Dr. Sanjiv Agarwal
The economic inflation in the country both food based and non food inflation is rising unabated and our Government at centre and also at states appear to be helpless and the least effected. That being so, this year’s budget forces upon us a new type of inflation adding salt to the injury. Yes, this inflation in the form of service tax which raises your direct cost by 10.3 percent. Let’s look how it is going to impact us.
Service tax has been levied on two newly carved services viz, air conditioned restaurants with license to serve alcoholic beverages and hotel accommodation. The restaurants may or may not be serving alcoholic beverages but it must be air conditioned and possess license to serve liquour. The restaurant need not be centrally air conditioned and as such all such restaurants where even one room air conditioner is installed would be taxed to service tax. So whether you consume food at home or at a restaurant, you are hit by inflation or an extra burden as service tax.
Take another case. If you go on an official tour or a holiday and stay in a hired room at any hotel, guest house, club etc where tariff is Rs 1000 per day or more, you will have to shell out 10 percent more on such accommodation. Directly or indirectly , it hits you as a consumer . If the stay is more than three months, which generally is not, this may not apply. Now hospital rooms too one costlier and in most cases over Rs 1000 a day, but those are not intended to be covered. But there is nothing to be happy on this count as the non Government hospitals have been otherwise comprehensively covered.
In case of vehicle repairs or service- be it a two wheeler or four wheeler, we used to pay service tax only when garage was an authorized service station but now all- authorized or un authorized service providers have been included in tax net. Not only this, all vehicles except three wheelers and transport vehicles will be covered. Taking insurance on life will also be costlier by 0.5 percent as tax rate goes up. Investment management done by insurance companies will also attract tax. Whether or not you are a club member, service tax will be payable whenever you avail of club facilities.
Not only this, domestic as well as international air travel will be more expensive. The hike is Rs 50 per air ticket on economy class but for higher class, it is 10 percent. Thus on a air ticket of Rs 10000 to Delhi you may have to pay Rs 1030 more, which is equal to two AC bus tickets. Legal services have been made costlier for you and so are coaching services for children. The tax on hospitals, clinics and diagnostic centers will affect one and all. Health services including diagnostic tests are already costly and service tax will burden the patients by 10 percent more.
Apart from service tax, taxes have been levied so as to make branded clothes costlier (better go back to the street tailor whom we have forgotten), stationery items used by children such as books, copies, ball pen, ink, pencil, sharpeners, lap tops etc all have been made costlier. Perhaps what’s cheap is mobile phones- keep chatting and smsing.
thanks sir, i have one question that whether service tax is applicable to hotel which have air conditioned rooms having rent more than rs. 1000 D what is the effective date