Modi Gearing up for ‘Service’ Shock to People

Ahead of the GST introduction later this year, the government is planning to increase the Service Tax once again. Reports are emerging that the finance minister may hike service tax rate to 16-18 percent from the current 15 per cent in the Budget to be tabled on Wednesday.

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This move will have a huge impact on the people as it will make flying, eating out, phone bills and a host of other services expensive. This is intended to make the Service Tax closer to the proposed tax slabs for GST. This increase will ensure that the consumers will avoid a greater price shock when GST is rolled out.

GST, which will subsume central and state levies like excise duty, service tax, and VAT, is scheduled to be rolled out from July 1. The tax slabs decided for the GST are 5, 12, 18 and 28 per cent and taking service tax closer to one of the slabs is a logical move in the Budget.