New Delhi: A slew of changes are going to come into effect in the tax regime from Wednesday, which will make services costlier and impact the way people buy goods and services.
Services tax will go to 15 per cent with the imposition of Krishi Kalyan Cess from June 1, which will make eating out, travel through railways and air, mobile calls and buying insurance among many other services costlier.
In the Union Budget, finance minister Arun Jaitley had proposed 0.5 per cent Krishi Kalyan Cess on service tax. Also payment in cash for buying goods and services worth more than Rs 2 lakh will attract one per cent tax collected at source (TCS) from Wednesday as per the budget provisions.
Under this, the seller will be required to collect an additional one per cent from the purchaser, and pay it to the government. This will mean if you use cash for the purchases of over Rs 2 lakh, you will have to pay extra money which can later on be claimed as a credit at the time of paying income tax. This only advances payment of income-tax but will help to curb black money transactions.
For buying cars, one per cent TCS will be applicable if the value of vehicle is above Rs 10 lakh. However, the government has rolled back its controversial Budget decision to apply one per cent tax collection at source on cash purchase of gold jewellery of Rs 2 lakh and above and raised the threshold to the earlier Rs 5 lakh with effect from June 1. Jewellers had gone on strike against this rule.
Also a new tax “Google tax” or Equalisation Levy will come into effect from Wednesday to tax online advertisements. The purpose is to tax online digital portals including Google, Facebook and Twitter that get significant online advertisement revenues from India.
The four-month amnesty scheme for black money holders to come clean by paying tax and penalty of 45 per cent on such assets will also open on Wednesday. In a relief, the government has decided that there will be no TDS on PF withdrawal upto Rs 50,000 against earlier limit of Rs 30,000.
