The Telegraph
Monday , April 2 , 2012
Since 1st March, 1999
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Services turn pricey

New Delhi, April 1 (PTI): Telephone calls and restaurant bills are among the activities to cost more from today with the hike in service tax to 12 per cent coming into effect from the new financial year.

Finance minister Pranab Mukherjee increased the levy to 12 per cent from 10 per cent to garner an additional Rs 18,660 crore during 2012-13.

The proposal, which will make a host of services, including travel by air-conditioned rail coaches, courier services and coaching classes, expensive, comes into effect from April 1, 2012.

There are over 120 services which attract tax. These include life insurance, beauty parlour, advertisement, dry cleaning, health clubs, cable operator, credit card and credit rating.

The government proposes to collect about Rs 1.24 lakh crore from service tax during the current financial year, up from Rs 95,000 crore in 2011-12. The sector accounts for about 59 per cent of the country’s gross domestic product.

To expand the base of service tax, Mukherjee has proposed a negative list, a notification on which will be issued later.

Under the negative list proposal, tax will be levied on all services expect those mentioned in the list. At present, the tax is levied on the basis of a positive list, meaning that it applies only to specified services.

The proposed negative list will include admission to entertainment events, access to amusement facilities and travel by radio taxis and auto rickshaws.

Other important services which will not attract the tax include funeral, burial, mutate services and transport of the deceased.

Car insurance premium

Owners of cars, commercial vehicles and two-wheelers will have to pay more towards insurance with enhanced motor insurance rates coming into effect from today.

The premium rates for third-party motor insurance in certain cases will go up as much as 40 per cent from April 1, 2012, according to the Insurance Regulatory and Development Authority.