Hold your breath

Days are not away when we may need to pay “Service tax” on air that we breathe; we can argue as to why it can happen or why it can’t. There are ample justification of this getting applicable, Government is bankrupt, there fiscal deficit is mounting on continuous basis and they have no means to abridge the gap. They plan to dilute their holdings through disinvestment and earn money; all collected still insufficient to do the balancing, this is apart from the collection they made after the 3G auctions.

They need more money, how much is more not yet defined; they could have thought of implementing new taxes but couldn’t pursue it looking at the upcoming assembly elections. Any increase in direct taxes would have damaged their image of being “common man’s” party, so they thought of new way of targeting “Services”. The term which is generally miss/ non- understood by common people and not many are able to give a demarcation between services and products.

Is it a very difficult thing to understand; any product/ service which gets under the purview of tax is passed to the customer, it’s not the provider who absorb the liabilities but in fact it’s the customer only who gets the hits.

With the budget set in few new services getting added to the service tax bracket and for few the scopes got increased. Hotels, travel, restaurants, hospitals, life insurance and what not; either the scope of the service tax is increased or new taxes has been imposed.

The biggest turnaround that being made is; The service tax will be payable on accrual basis from April-1-2011, So the moment a service provider will book any invoice in his books the tax will become payable, irrespective of whether he has realized the invoice amount or not. There might be some fine prints with this new change which are not very evident with me but prima-facie it doesn’t look like an intelligent approach.

How much money in the form of taxes a common man will be spending why can’t we have a flat taxation is a big time question?

I’m paying taxes on income which I earn through my efforts; after paying income taxes whatever left should be fully available for me to consume; I will buy property, will party, enjoy and do whatever I like; no one should take a biting in between in the form of property tax, service tax, vat, mat etc etc. Is someone paying an ear to this?

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