sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
Service Tax »
 12 ways to avoid paying more for bank services
 I-T return filing: Income Tax offices, Ayakar Seva Kendras to remain open from March 29-31
 Top 5 money matters you must settle before March 31 From income tax returns to LTCG,
 Steep fines for missing March 31 income tax deadline
 CBEC clears some air on refunds under GST, central excise, service tax laws
 3 key tax changes for senior citizens which will come into effect from April 1, 2018
 Income tax returns (ITR) filing: Not filed returns for 2 years? Beware! Deadline nearing
 All you want to know about HRA: When you can claim and how it is calculated?
 Income Tax Saving: 6 ways to save tax without investing before March 31 tax deadline
 Unnable to file your tax return? Take help of these portals
 Do you know which 80C instruments can help you save tax and carry no future tax liability?

Impact of service tax cut
March, 21st 2009

It is not possible for me to indulge in financial profligacy without adequate resources, said the acting Finance Minister Pranab Mukherjee, brushing aside criticism that the government was not doing enough to overcome the slowdown.

However, the government recently announced a 2% cut in excise duty and service tax rate to put some money into individual wallets and to boost consumer demand.

The general excise duty has been reduced from 10% to 8%, and the rate of service tax cut from 12% to 10%. Also, the 4% excise duty cut announced in December 2008 will now continue beyond March 31, 2009. The amount of money in the system is the same, but with this measure, the government has shifted some amount from its own reserves to the taxpayer's wallet. This should spur demand, says financial planner Rohit Sarin.

While the excise cut, if passed on to consumers, will mean that the prices of consumer durables, steel products and cars will come down marginally, it is the reduction in the service tax rate that will bring direct relief.

Processing charges on loans and credit card transaction costs could witness some reduction as they include a service tax component. Consumers can also hope to save on outgoings on mobile recharge vouchers, direct-tohome packages and operating systems software.

More Money Today stories

For investors, risk premium charges for insurance policies, brokerage charges on securities and transaction costs on mutual fund investments will see a marginal reduction because all of them include a service tax element as well. The cut in service tax will have a much wider impact, says Sarin.

Will these tax cuts impact overall expenses? The indirect taxes contribute 6-15% of average monthly spending. Considering a typical taxpayer (between 28 and 35 years, living in a metro, with a family of three), we asked experts to work out a spending pattern and average applicable indirect taxes. The result: the minimum gain for someone earning Rs 5 lakh annually will be to the tune of 10%. These gains are more pronounced as income, and therefore spending, goes up.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions