GST: Finance Minister might hike service tax to 16-18% in Funds
New Delhi: Finance minister Arun Jaitley might hike service tax charge to 16-18% from the present 15% within the funds, due on Wednesday, as a precursor to the products and providers tax (GST) rollout.
The transfer, that can make flying, consuming out, cellphone payments and a number of different providers costly can be an try and take the charges nearer to the proposed tax slabs for GST.
GST, which is able to subsume central and state levies like excise responsibility, service tax and value-added tax (VAT), is scheduled to be rolled out from 1 July. The tax slabs determined for the GST are 5, 12, 18 and 28% and taking service tax nearer to one of many slabs is a logical transfer within the funds, tax consultants mentioned.
Tax consultants say, Jaitley, who had in his earlier funds hiked service tax charge by zero.5% to 15%, might increase the levy by at the very least one proportion level to 16%. Some others really feel there might be completely different service tax charges with a decrease 12% for primary providers and the next 18% for the remaining. Additionally, the next service tax for April-June will assist the federal government garner extra income to fulfill bills on schemes and programmes it might be planning to include the influence of demonetization.
A service tax charge nearer to the GST charge can even assist shoppers keep away from a better value shock when the brand new nationwide gross sales tax is rolled out. Whereas service tax till now could be a central levy, it is going to be equally break up between the Centre and states underneath the brand new GST regime. Most providers, besides important ones like main healthcare and primary schooling, will likely be coated by GST.
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Service tax was budgeted to supply Rs2.31 lakh crore in 2016-17, greater than 14% of the Centre’s complete tax revenues of Rs16.30 lakh crore. This would be the third time that Jaitley will increase service tax charge. Service tax from 1 June 2015 was hiked from 12.36% to 14%. A zero.5% Swachh Bharat Cess was levied on all providers, taking the full incidence of service tax to 14.5% from 15 November 2015.
Within the final funds, he imposed a Krishi Kalyan Cess on the charge of zero.5% on all taxable providers to take the levy to 15%.
