Industry & Economy
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Budget
At your service, tax!
Our Bureau
Chennai
,
July 8
WHILE you may not see prices of household goods and durables go up in the near future, you could get bushwhacked by the new services that the Budget has brought under its purview.
As Chennai-based advocate Mr K. Vaitheeswaran points out, service tax can affect the common man in a significant manner as now a variety of services consumed by him will attract a tax.
The rate now proposed by the Budget is to be increased to 10 per cent from 8 per cent apart from a 2 per cent education cess on the tax element.
The cost to the manufacturers who consume various services would also go up since the Government is yet to frame rules providing for service tax credit to be utilised against excise duty. However, as and when the amendments are effected in the Central Excise Act, the Rules would be amended.
Some of the new services such as construction services, services in relation to procurement of goods and inventory management are likely to increase the cost of providing services. Further, the organised sector would face stiff competition from the unorganised sector, which would be more than willing to bill without service tax.
The scope of financial services has been expanded to cover a host of services which will affect the common man such as charges pertaining to issue of pay order charges, cheque book charges, demand draft charges, letter of credit, bill of exchange, bank guarantee services, overdraft facility, bill discounting facility and locker facility. The list is long!
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