The tax man, at your ‘service'

S. Murlidharan | Updated on March 08, 2011 Published on February 28, 2011

Air tickets to weigh more on your wallet thanks to a higher service tax   -  Business Line

When you travel by air within India or fly to exotic destinations abroad or fly abroad to see your near and dear ones, be prepared for a slightly higher service tax. And while admitting your dear ones to five-star hospitals, gird your loins and be prepared for service tax on extravagant hospital bills.

Of course, nobody can have a serious quarrel with the Finance Minister over these imposts. After all, many of the corporate hospitals have all the trappings of a star hotel so much so that businessmen see wisdom in transforming dormant hotels into thriving and throbbing hospitals.

The man on the street as well as homemakers would not be impacted materially by these proposals, however. And, at any rate, when the GST regime kicks in, one can look to some reduction in the cost of goods and services with the ultimate customer not being burdened with tax on tax, the most obnoxious feature of the current system of indirect taxation.

Another proposal that would not materially impact their purses despite being significant is the one removing the exemption regime and subjecting all the product categories that are currently exempt from excise duty to a small but symbolic 1 per cent tax.

Of a piece with the same spirit is the proposal to impose service tax on investment activities of insurance companies. It is common knowledge that insurance companies in India do not earn much from their bread and butter operations and, therefore, dabble substantially in investment activities, with ULIP being their prime driver.

The reduction in customs duty on farm equipment imports to 2.5 per cent from 5 per cent is also welcome since the country needs to adopt modern farming, storage and distribution practices to overcome its food crisis and relentless food inflation.

Working women have a reason to be peeved though — their tax exemption limit stays where it was at Rs 1,90,000, whereas men have got relief from Rs 1,60,000 to Rs 1,80,000. Though they are still ahead of their male counterparts by Rs 10,000, the narrow lead would go next year when DTC is ushered in — Rs 2,00,000 exempt whether male or female.

The Railway Minister a few days ago made travel more pleasant for females on the wrong side of 50 by lowering the age barrier to 58 for them to qualify for senior citizen concession. The Finance Minister should have followed suit by being considerate to females given the fact that working women often have to work a lot harder balancing home and office work.

(The writer is a Delhi-based chartered accountant.)

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Published on February 28, 2011
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