India: List of new services on which you will be paying tax

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July 3, 2012

If this year’s budget was not hurting you enough, the change in service tax rule will. Effective today, almost all services that we use are subjected to 12% service tax. Only a few on the negative list and the exempt list have been spared.

July 3, 2012

If this year’s budget was not hurting you enough, the change in service tax rule will. Effective today, almost all services that we use are subjected to 12% service tax. Only a few on the negative list and the exempt list have been spared.

And of course the services offered by the unorganised sector remain unaffected. Some see the changeover as a more efficient way of administering the tax. In fact, India Inc has been in favour of a negative list of services that will not be taxed instead of a positive list which is expanded every year to tax more services.

Here is the list of new services on which you will be paying tax.

1) Speed Posts, Express Parcels

Private couriers were subject to service tax since 1996 but speed post and express parcel service of the post office were spared. Premium postal services and life insurance provided by the post office will attract 12% service tax. Basic postal services, money orders, savings accounts, pension payments, etc remain exempt.

2) First Class & Air-Conditioned Class Travel by Railways

After holding back for several years, the government has finally decided to subject upper class rail travel to service tax. Tax on travel by lower classes, suburban services and Metros would have hurt Aam Admi and so they remain exempt.
 
3) Travel & Holidays Bought From Online Portals

Tickets and overseas holidays bought via e-portals in India and a single ticket bought for many overseas destinations are to be fully taxed. If service providers and recipients are in India, tickets for trips originating in India will be taxed. But if you were to buy, say, separate tickets for the London-New York-London leg of New Delhi-London-New York round trip in London, that part is tax free.
 
4) GMAT, GRE Tests

Taking tests such as GMAT and GRE will get more expensive as companies such as Prometric Testing that conduct these examinations will now be subject to service tax. Entrance tests of Indian institutions such as IITs and IIMs will be exempt. CFA Institute's examination fee will also rise. Private tuition providers will now be subject to service tax if their annual turnover exceeds Rs 10 lakh.


Courtesy: service tax India