In a double blow, eating out, phone bills, internet, movies, healthcare and banking transactions will cost more from after a new tax came into force even as a steep hike in price of petrol, diesel, ATF and non-subsidised LPG was also effected.
Finance Minister Arun Jaitley had in his Budget for 2016-17 proposed a 0.5 per cent Krishi Kalyan Cess on all taxable services, which came into effect from Wednesday. With this, effective rate of service tax, which is leviable on movie tickets, restaurant bills, credit card and banking transactions, phone bills and healthcare among others, now is 15 per cent.
Jaitley had in his last Budget increased the Service Tax rate from 12.36 per cent to 14 per cent, effective June 1, 2015. From November 15, 2015, a 0.5 per cent Swachh Bharat Cess to fund Prime Minister Narendra Modi’s cleanliness drive, was imposed on all services, taking the effective rate to 14.5 per cent.
Experts says, the service rate is being in phases increased to bring it closer to the expected goods and services tax (GST) rate of 17-18 per cent. Also from Wednesday, petrol price was hiked by a steep Rs 2.58 per litre and diesel by Rs 2.26 a litre, the third increase in rates in five weeks.
Following the auto fuel prices, aviation turbine fuel or jet fuel price was on Wednesday hiked by a steep 9.2 per cent, a move that is likely to make air travel costlier. Simultaneously, the oil firms raised prices of non- subsidised LPG, which consumers buy after exhausting their quota of 12, by Rs 21 per 14.2-kg cylinder, the second monthly increase in rates.