New Delhi: Come Wednesday, you will have to pay more for making calls, eating out, air or rail travel, buying and renewing insurances, watching films at cinema halls and TV through DTH, among many others services.
The 0.5 per cent Krishi Kalyan Cess announced in the Union Budget on “all taxable services” comes into effect June 1. Last year, the Modi government had imposed a 0.5 per cent Swachh Bharat cess on service tax to fund the Prime Minister’s pet project, the Swachh Bharat Abhiyan.
In a little over a year, the Modi government has increased service tax from 12.36 per cent to 15 per cent (including the two cesses). Only last month, the parliamentary standing committee on finance had expressed its displeasure over the fact that money collected by way of cess was not being utilised for the designated purpose.
The Krishi Kalyan Cess will make a host of services costlier, like visits to beauty salons, spas, gyms, courier services, credit and debit card-related services, chartered accounts, architects, insurance and demands raised by real estate builders for housing projects, among others.
The Modi government has been using the cess route to generate more revenue. Significantly, the Modi government has been claiming credit for accepting the recommendations of the 14th Finance Commission to increase states’ share in Central taxes by 10 per cent to a record 42 per cent. Despite this, the Centre does not share the revenue earned through cess with states. The government has said that proceeds from the cess will be used for financing initiatives to improve agriculture and for the welfare of farmers.
