Smoking, eating out, air travel to be costlier

RSTV Bureau

Smoking and consumption of other tobacco items is set to become more expensive, while increase in service tax rate would make costlier a whole lot of other things including air travel, eating out and paying bills.

Those which will turn cheaper include leather footwear, locally made mobiles, computer tablets, microwave ovens, peanut butter, packaged fruits, ambulance service and agarbattis.

Continuing the trend set by his many predecessors, Finance Minister Arun Jaitley today came down heavily on smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2015-16.

Citing need for promotion of public health, Jaitley said: “Excise duty on cigarettes is being increased by 25 per cent for cigarettes of length not exceeding 65 mm and by 15 per cent for cigarettes of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos.”

He made changes to the compounded levy scheme applicable to pan masala, gutkha and certain other tobacco products.

As per the Budget proposals, excise duty on cut tobacco is being increased to Rs 70 per kg from Rs 60 per kg earlier.

On the increase of Service Tax, Jaitley said: “To facilitate a smooth transition to levy of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cesses from 12.36 per cent to a consolidated rate of 14 per cent.”

Subsequently, eating out at restaurants, stay in hotels, air travel, cable and DTH services, visiting beauty parlours, courier service, credit and debit card related services, dry cleaning of clothes, stock broking, asset management and insurance and a host of other activities that require availing of service from another party will become expensive.

Jaitley, however, spared the common man from price hikeson many commonly used day-to-day items by reducing duties. Leather footwear priced above Rs 1,000 per pair will cost less as excise duty has gone down to 6 per cent from 12 per cent earlier.

Packaged fruits and vegetables will also become cheaper as pre-cooling, ripening, retail packing and labelling of these items have been exempted from service tax.

Similarly excise duty on locally made mobile phones, LED/ LCD panels, LED lights and LED Lamps have been cut.

Microwave ovens are likely to become cheaper as a key component, magnetron, has been exempted from basic customs duty as compared to 5 per cent earlier. Refrigerator prices could also come down as import duty on various components has been reduced.

Similarly, solar water heater will be less expensive with excise duty on the item has been changed from 12 per cent to nil without CENVAT credit or 12.5 per cent with CENVAT credit.

Agarbattis prices will come down as it will now attract nil excise duty with Jaitley announcing “full exemption from excise duty is being extended to captively consume intermediate compound coming into existence during the manufacture of Agarbattis”.

Prices of pacemakers are expected to come down as specific materials used in its manufacturing have been exempted from duties.

Ambulance and ambulance services are also expected to come down as excise duty on chassis of such vehicle has been cut to 12.5 per cent from 24 per cent, while all ambulance services provided to patients are being exempted from service tax.

A visit to museum, zoo, national park, wild life sanctuary and tiger reserves will also become pocket friendly with the Finance Minister exempting such activities from the service tax.