Travel, eating out, mobile bills likely to get more expensive from April 1

New Delhi: Whatever good or bad news the Budget 2016-17 may roll out for common man, but what seems likely that service tax rate will move up from the existing 15 percent) inclusive of Krishi Cess and Swach Bharat Cess).

As a precurser to the GST rollout, service tax may go up by 0.50 percent to 1 percent in the upcoming budget. The existing service tax rate is 14 percent. With 0.50 percent of Krishi and Swach Bharat Cess, the effective service tax becomes 15 percent.

In the GST regime which is expected to kick off from July 1, 2017, services will be taxed at 18 percent.

As per PTI, some experts feel there could be different service tax rates with a lower 12 percent for basic services and a higher 18 percent for the rest.

Also, a higher service tax for April-June will help the government garner more revenue to meet expenses on schemes and programmes it may be planning to contain the impact of demonetisation.

A service tax rate closer to the GST rate will also help consumers avoid a greater price shock when the new national sales tax is rolled out.

While service tax until now is a central levy, it will be equally split between the Centre and states under the new GST regime. Most services, except essential ones like primary healthcare and basic education, will be covered by GST.

Service tax was budgeted to provide Rs 2.31 lakh crore in 2016-17, more than 14 percent of the Centre's total tax revenues of Rs 16.30 lakh crore.

So, in effect the cost of availing all services like package tours, mobile bills, transport and travel by rail and air, buying a house, cab services, gymming, beauty parlours etc, all are likely to rise further very soon.