NEW DELHI: Indian government has raised 14 percent more tax on business class air travel, while entry tickets to museums, zoos and tiger reserves would become cheaper, investment in mutual funds (MFs) and chit funds would become more expensive with some of the service tax proposals announced in the Budget coming into effect.
Finance Minister Arun Jaitley had come out with a host of proposals last month to rationalise service tax, which is levied at an effective rate of 12.36 per cent. These also include raising the rate to 14 per cent, but that will come into effect from a date to be notified later by the government after the passage of the Finance Bill by Parliament.
However, the proposals which will come into effect from April 1, 2015 include tax exemption granted to services like admission to a museum, zoo, national park, and wild life sanctuary or tiger reserve.
Similarly, life insurance scheme Varishtha Pension Bima Yojna, ambulance service, retail packing of fruits and vegetables, too will not attract service tax levy.
Air travel, on the other hand, will become expensive as service tax will now be levied on 60 per cent of the value of the ticket as against 40 per cent currently.
“At present, Service Tax is payable on 40 per cent of the value of air transport of passenger for economy as well as higher classes e.g. business class.”
“The abatement for classes other than economy is being reduced and service tax would be payable on 60 per cent of the value of such higher classes”, said the memorandum to the Finance Bill, adding that the proposal will come into effect from April 1, 2015.
Services provided by mutual fund agents, marketing of lottery tickets, departmentally-run public telephone and free telephone calls from airport and hospitals will be subject to payment of service tax.
