An ordinary Indian
in the south of the country eagerly awaits June 1st ,for it’s the
date when the south west monsoon lands in its lap. But in recent years, they along with those
across the rest of the country who pay direct and indirect taxes, a
comparatively rare breed, dread the day, for its a day when the taxes proposed
in the union budget at the fag end of February kick in, and these seem to rise
with every passing year.
From this day
forward, the service tax, which is now applicable on most services, will be 15%,
up from 12.36% when this government took over office two years ago. First raised
to 14% then to 14.5% for a Swacch Bharat, which still seems a distant dream,
and now 15% with a 0.5% Krishi Kalyan Cess added for farmer welfare in the wake
of the drought conditions prevailing across India. ‘Acche din’ for the government seems to come around
every year on this date. Next year the excuse will probably be the
implementation of the 7th Pay Commission recommendations! Incidentally
neither this nor previous governments at the center have done anything
constructive for the farmers, in terms of irrigation, supply chain, insurance,
or for that matter, cropping information and inputs.
By raising taxes
every year successive governments meet their fiscal targets. But what about the
common man’s fiscal targets? The middle class consumer, remains bewildered - After paying a hefty service tax, he hardly
gets any services in return, for most of funds are used for schemes and
services reserved for the economically and demographically marginalized, to
enhance vote banks.
All services that
the middle class have come to enjoy because of their availability, and
entertainment value, from Pizzas to movies will cost that much more. The other day, friends of mine ordered 4
Pizzas from a famous eatery. The Taxes equaled the cost of one Pizza!. While
the Pizza Bill was 2696, the total bill was Rs: 3188, the balance was taxes
almost, if not equal to the cost of a Pizza itself. If one were to convert the
Pizza into a pie chart, it would have presented a pretty picture to the Tax
man!
But that’s not all
that June 1st has to offer the citizen. It rains taxes, not water on
this day!
The cash purchase of goods and services
over Rs 2 lakh will also attract 1% tax deducted at source – While the controversy
over taxing purchase of jewelry in cash has been set at rest, with the
government giving into the jewelers lobby, and cancelling its earlier
notification on the subject, payment in cash for buying goods and
services worth more than Rs 2 lakh with the exception of jewelry will attract 1
per cent tax collected at source (TCS) from today. The existing TCS (since July
1, 2012) of 1 per cent on cash purchase of over Rs: 5 lakh of jewelry and over
Rs: 2 lakh of bullion will continue.
Traders will have to pay Higher
Securities Transaction Tax (STT) of
0.05% (up from 0.017%on options. While this may not in itself be hard on the
pocket of stock traders, when combined with the
additional 0.5% Krishi Kalyan Cess levied on Brokerage and Transaction charges,
it might become significant in the hands of the trader.
And
finally, vehicle enthusiasts, have to pay an additional 1% (Collected at
source) on Vehicles costing over Rs: 10 lakh.
Most decently endowed vehicles come in this class, and this could be a
dampener for a short while till people give in to their temptations for a
little more. The icing on the cake is
the hike in Petrol and Diesel prices, when the international prices of crude are
at an all-time low. ONGC and the Oil Companies have made a massive profit, and
pay their employees far more than most companies can afford to do, all at
taxpayer’s expense, for production / conversion costs are added into the
prices.
The
Government’s view, is that the middle class, can well afford this minor
inconvenience for the greater good, just as the jam does for the sake of the
two slices of bread in a sandwich!
