Mobile bills, eating out in AC restaurants, a visit to a spa, dry cleaning, coaching class fees--everything that attracts service tax is set to get more expensive from November 15 as the government imposes a 0.5% Swachh Bharat cess.
The levy , which was announced in the budget, will be used for meeting specific goals in PM Narendra Modi's ambitious sanitation and cleanliness programme, which includes building toilets across the country. Although finance minister Arun Jaitley had not announced the list of services that would face the latest cess, there were indications that the levy would be imposed on high end services such as five-star dining. But the government has opted for an across-the-board load on consumers. In the last budget, the government had increased the service tax rate from 12% to 14%, which is widely expected to increase once goods and services tax kicks in.
The government levies a slew of cesses and surcharges -ranging from the ones for education and health to those on petrol and diesel and petrol for highway construction -and the latest one will only add to the burden of consumers.These are over and above the taxes that individuals and companies pay in the form of income tax, corporation tax, customs duty on imported goods, central excise, service tax and state levies such as VAT.
While all central taxes are budgeted to fetch the government Rs.14.5 lakh crore in the current fiscal, cesses and surcharges add up to Rs.1.17 lakh crore, which is over 8% of all levies. A cess gives the Centre the freedom to spend the funds raised the way it wants to, instead of sharing 42% of the mop-up with the states as is the case with central taxes. Businesses are also mandated other spending, which the government is unable to undertake due to strained public finances, such as allocating 2% of their profit on corporate social responsibility projects.These are not provided for in the budget.
“Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat... This will translate into a tax of 50 paisa only on every Rs.100 worth of taxable services. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives,“ the official statement said.
The levy , which was announced in the budget, will be used for meeting specific goals in PM Narendra Modi's ambitious sanitation and cleanliness programme, which includes building toilets across the country. Although finance minister Arun Jaitley had not announced the list of services that would face the latest cess, there were indications that the levy would be imposed on high end services such as five-star dining. But the government has opted for an across-the-board load on consumers. In the last budget, the government had increased the service tax rate from 12% to 14%, which is widely expected to increase once goods and services tax kicks in.
The government levies a slew of cesses and surcharges -ranging from the ones for education and health to those on petrol and diesel and petrol for highway construction -and the latest one will only add to the burden of consumers.These are over and above the taxes that individuals and companies pay in the form of income tax, corporation tax, customs duty on imported goods, central excise, service tax and state levies such as VAT.
While all central taxes are budgeted to fetch the government Rs.14.5 lakh crore in the current fiscal, cesses and surcharges add up to Rs.1.17 lakh crore, which is over 8% of all levies. A cess gives the Centre the freedom to spend the funds raised the way it wants to, instead of sharing 42% of the mop-up with the states as is the case with central taxes. Businesses are also mandated other spending, which the government is unable to undertake due to strained public finances, such as allocating 2% of their profit on corporate social responsibility projects.These are not provided for in the budget.
“Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat... This will translate into a tax of 50 paisa only on every Rs.100 worth of taxable services. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives,“ the official statement said.
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