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Service Tax Hike will Push up Prices of Goods, say Experts

CII slams policy-makers for ‘meagre’ allocations to farm sector in the Union Budget

Published: 07th March 2015 06:00 AM  |   Last Updated: 07th March 2015 06:00 AM   |  A+A-

Service

VIJAYAWADA:  Increase in service tax is intended to prepare people for the GST regime that is expected to come into force from the 2016-17 financial year, opined experts at a workshop on budget analysis organised by the  Confederation of Indian Industry (CII) AP Chapter here Friday.

According to them, GST is expected to be between 20 per cent to 23 per cent and the increase in the service tax, introduction of Swachh Bharat cess, simplification of rules, removal of exemptions, subsuming of education and higher education cess seems to be part of that process.

The experts, including SK Rahman, commissioner of customs and central excise in Vijayawada, B Janardhan and S Ananthanarayana of PricewaterhouseCoopers said, increase in service tax and removing exemptions will make the travel by air, eating out, attending movies and concerts costly.  With increase in freight charges, tax effect on fuel, the transportation of goods will be affected, which ultimately will have an impact on the prices of goods.

Rahman admitted that they would have a tough task on their hand in collecting service taxes in view of the increase.

He said 2015-16 will be a watershed year, as the customs, excise and service tax revenues are expected to cross ` 2 lakh crore-mark. In the current fiscal, they stood at `1.88 lakh crore, ` 1.85 lakh crore and `1.68 lakh crore respectively.

The impact of proposals pertaining to direct and indirect taxes on the industry and the individuals were also analysed by the experts on the occasion.

D Ramakrishna, past chairman of CII Vijayawada zone said the Union budget was disappointing for the manufacturing sector, though much was expected in view of PM Narendra Modi’s ‘Make in India’ talk.

He said no measures were put in place for wealth creation, which will pave the way for employment generation. He wondered why Indian policy-makers only talk but fail to see and listen where the world is.

G Venkateswara Rao, vice-chairman of CII Vijayawada said in agriculture perspective, the budget was not encouraging. Unfortunately they were cuts in allocations and not much was done for improvement of land health, R&D and for farm mechanisation, given the continuing dwindling of farmhands, more so in four coastal districts of Andhra Pradesh.

CII chairman LVS Rajasekhar had presided over the meeting.

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