The new service tax regime introduced by the government on July 1 comes as an additional burden at a time when citizens are already bearing the brunt of high food and fuel prices and a falling rupee.
Till recently, only 119 services came under the tax net. Now, with the introduction of a negative list, all services – except 38 services, most of which are governmental – will attract a high service tax of 12 per cent.
Moreover, the low exemption limit for business units, set at Rs 10 lakh a year, will adversely affect small service providers. Given the galloping inflationary trend, an annual turnover of Rs 10 lakh for any business is a trifle. The government should increase the exemption limit to Rs 24 lakh and adjust it quarterly with the inflation index.
This will encourage small entrepreneurs to provide different types of services, especially in rural areas and help the poor access various services at the cost of a smile.
Puranjit Mukherjee Kolkata
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