Dual-rate service tax may be announced in Budget 2017
The Government may be looking at introducing two rates of service tax in the Union Budget that is scheduled on Febraury 1, 2017.
Sources told Alok Priyadarshi of Zee Business that the Government may introduce two slabs of 12% and 18%, each for service tax.
Currently, service tax in India is 15%.
Sources said that service tax for essential items will be lower while a higher service tax is on the anvil for other services.
"The figures for indirect tax collections (Central Excise, Service Tax and Customs) up to November 2016 show that net revenue collections are at Rs 5.52 lakh crore, which is 26.2% more than the net collections for the corresponding period last year. Till November 2016, 71.1% of the Budget Estimates of indirect taxes for Financial Year 2016-17 has been achieved", Central Board of Excise and Customs said in December 2016.
On indirect tax front, Government's revenue has jumped 26.2 per cent till November 30 with central excise showing a surge of 43.5 per cent and customs of 5.6 per cent and service tax of 25.7 per cent.
"The Finance Minister, Mr. Arun Jaitley, had brought in a proposal during the Union Budget 2016 to impose the Krishi Kalyan Cess on all taxable services. The recommended amount was at the rate of 0.5%, which would put the effective service tax rate at 15%," Bankbazaar.com said.
During the 2015 budget, the Finance Minister had incremented the service tax rate from 12.36% to 14%, which had been applicable from June 1, 2015. Further, from November 15th, 2015, an additional Swachh Bharat Cess got added at the rate of 0.5%, which left the service tax at 14.5%, the website added.