The coming service tax tsunami

The service sector accounts for 57% of India’s GDP (Source: GoI)

The Govt of India is all set to tax the living daylights of this sector.

In the last budget, Service Tax regime changed in a dramatic fashion-from a positive list it changed to  a negative list.So now all services (other than those in the negative list) will be taxed.

The Service Tax was also hiked from 10% to 12%- a hike of 20%

The govt intends to introduce the Goods & Services Tax (GST) soon in the next 12-18 months.Once the GST comes to force, the service tax will be hiked up to 16% (see here)

So effectively, in a span of two years, the service tax will be hiked from 10% to 16% an increase of 60%

From an investment perspective, this implies a high inflation regime and a negative outlook for the service sector such as hospitality, housing etc

2 replies on “The coming service tax tsunami”

Came here through The Reformed Broker. You have a great blog here!

Could you set up a link for RSS feed for the blog? It’d be simpler for us to access your posts.

Tx for your feedback.Have set up a link for the RSS feed as suggested

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