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Because from June 1, 2015, you will have to fork out 14 per cent service tax instead of 12.36 per cent
Let's see how this hike in service tax will affect your lives.
Do not call to tell your friends about this
Stay warned because this rise in service tax is going to show up in your mobile bill. Considering an average monthly mobile bill of Rs 1000. Earlier after applying the service tax the bill would turn out to be approximately Rs 1124. However after the increase in percentage, the bill now would be Rs 1140.
A good reason to ditch the phone and instead meet your friends!
Let's cook at home honey!
Yes, you will find yourself saying this more often. Polish your culinary skills because eating out just got expensive. A meal for two in a fancy restaurant, over the weekend costs not less than Rs 1500 approximately.
For two such outings in a month, the expense would amount to Rs 3000. Adding on the previous service tax, the total amount would be Rs 3371.
The same indulgence will now cost you Rs 3420. Your wallet and your spouse, both are going to love it when you whip up a fancy meal at home!
Couriers become expensive
Every courier bill levies a service tax. With service tax raised to 14 per cent, couriers will now be more expensive than before.
This may not impact your pocket significantly since couriers are sent once in a while by individuals. But this will definitely impact offices wherein couriers are sent out in volume. The rise in service tax will be responsible for a significant increase in expenses there.
Stop and read this before you swipe that card
Expenses on the credit card are subject to service taxes which are levied on the total value of the transaction. As far as possible, swipe your credit card for only those payments where any service fee or processing fee is not applicable.
Service tax is applicable on the interest charged on credit cards since it is a service provided by the bank to the card holder.
Now you know how bad plastic money can hurt your pocket. Tread carefully all card holders.
Set aside more money for insurance premiums
With service tax being increased to 14 per cent, it is directly going to impact the premium amount you pay for the insurance. So do the math and work out the revised premium amount.
That way you can plan ahead and set aside or save for the premium accordingly.
Online shopping spree will now cost you more
Service tax of 14 per cent is applicable on all e-commerce transactions. E-commerce goods and shipping will attract this service tax and hence will turn out to be expensive.
This will also include service providers who connect potential buyers and sellers online.
To name a few services, it would include Flipkart, Zomato, Olx, Snapdeal, etc.
Service tax adds to travel woes
Air and rail tickets will be impacted by the service tax increase. This basically means travelling will become more expensive. The airline industry is already struggling to keep up and the competition is intense.
And this additional increase in the total travel cost is not going to help the situation. Be prepared to shell out more for flight food, airport usage charges, etc.
Banking is expensive business
Service tax is applicable on services provided by banks like maintenance of bank accounts, ATM processing charges, loan processing charges, money transfer charges, etc. Due to the increase in service tax to 14 per cent, there will be an increase in the service tax levied by your bank. Though the increase may seem marginal if we look at it transaction-wise, the total increase on tax applicable throughout the year on banking services availed will be substantial.
Every penny earns interest and therefore it matters!
While the increase in service tax to 14 per cent is a part of the larger plan, wherein GST will be rolled out in 2016, there is no denying that all of us will be feeling the pinch now on. Though the increase is a small percentage, the point to be noted is that service tax is applicable on almost all the services availed by us on a daily basis. The sum of all the pennies added to every service we avail will be an amount which will make your wallet lighter.
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.
