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Now, if you hire a consulting or market research organization or a call center, 12% extra cash outflow is inevitable. BPOs will include in their invoice's another 12% service tax. Forget all this - if you want to advertise indoor or outdoor except print, you'll have the Service Tax follow you like "Dog in The Hutch Campaign". Now I wonder how long could Hutch advertise the dog on hoardings given that there is another watchdog on "service" alert?

If I am business-hiring service worth Rs. 100/- from 10 companies, I pay Rs. 112/- for each transaction, thus totaling my bill to Rs. 1120/-. Now let my net input cost be Rs.. 1000/-. Now let the value added by me be Rs. 2000/-. Thus, my output price is Rs. 4120/-. Suppose the VAT payable by me is 10%, this 10% will be charged on all the value I added - including that of service tax, which I shelled out to buy services from others. So my VAT 10% will be on Rs, 3120/- and not on the Rs. 2000/-, which is my actual value added. So VAT on service tax and service tax on VAT will be very much seen in the coming days.

If as an MBA student, I request Tata Motors to sponsor an event of our college by giving one lakh rupees, Tata Motors will think twice. Either they'll pay me that amount and the tax. or they'll pay me around Rs. 90,000/- so that with tax it becomes Rs. 1 Lakh. But if Sony is sponsoring a Mega Cricket Match series with billions of views and a billion $ worth of transaction, it shall NOT attract any service tax.

Rural sector lending, focus on Infrastructure are all-good. But the money is siphoned off from the middle class and is transferred to poor and the rich! We, who are already sandwiched, are again jammed.

Concluded.

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