Service Tax Syndrome: The Final Picture!

- by Arun Anand *

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For a common man, its like this - I, Arun Anand, go to a travel agent to get my 2nd class sleeper ticket done. Ticket costs Rs. 1000/-. Now I'll pay 12.2% tax vis-à-vis 10.2%. Agreed! Now if I go to ATM or use Credit card, a percentage (say 3 to 4%) service tax will come on that - thanks to the "professional" banks like ICICI who just wait to pass on everything to their customers. So altogether my service tax liability works out to be 15-16% easily. Hats off to Mr. PC!
A middle class person who needs to send Rs.1000/- to his son studying in Kota for IIT as a DD may have to shell out a service tax (its not clear what amount will be charged on DD etc., it should be 12% on the cost of the transaction). And this son has to of course shell out 12% in the coaching services (that's already there).

Now if you are a corporate, there is something sharper than FBT. This is named here as "Business Support Services", which could range from services hired from a house-keeping organization, which waters the plants, to services hired by ICICI from Infosys or SBI from TCS. Businesses typically outsource to save 10-15% of their costs and Mr. PC easily siphoned off 12.2% from this savings. And he wants Gross Domestic Savings to increase - Yes, it'll if you believe that government will save this receipt.

Exhibit: A Tip of the Iceberg - Excerpts from Finance Bill

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* Contributed by -
Arun Anand,
MBA Student,
NMIMS, Mumbai.

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