A new Service Tax burden effective from today

Ahmedabad, 1 July 2012

A new service tax regime, based on a negative list of exempted services, will come into effect on Sunday.

With this, all services — except the 38 activities put on the negative list — will come under the tax at the increased rate of 12 per cent, as announced in the Union budget.

With the services sector now accounting for 60 per cent of the gross domestic product, the Finance Ministry has set a target of Rs.1.24 lakh crore for service tax collection during 2012-13. This is significantly higher than the Rs.97,000 crore mopped up during the previous fiscal.

Among other things, you will now pay more for speed posts, express parcels as well as train travel by First Class and Air-Conditioned Class.

Tickets for travel and holidays bought from online portals too will get costlier.

Tests such as GMAT and GRE too will be costlier as companies conducting these examinations will now be subject to Service Tax.

Private tuition providers too will be subject to the tax if their annual turnover exceeds Rs 10 lakh.

Railway Minister Mukul Roy has said railways will not introduce service tax on freight and fare from July 1 and has written to Prime Minister Manmohan Singh, who is now looking after the finance portfolio, in this regard.