Budget 2012: Pay more for the comforts of life
Services like air travel, hotel stay, travelling in the AC class and first class in trains are set to become costlier.
New Delhi: Budget 2012 presented by Finance Minister Pranab Mukherjee on Friday, March 16, makes eating out and phone bills and other comforts of life costlier, pinching the common man. Increase in service tax will increase one's mobile bills by 2 per cent every month.
Two and four wheelers will get more expensive and so will refrigerators, air conditioners (ACs), washing machines, watches, cosmetics and tobacco products.
The FMCG industry said they will be forced to increase prices even though sales are already muted and margins are under immense pressure. Pranab Mukherjee increased excise duty to the pre-crisis level of 12 per cent from 10 per cent.
Also biting hard is air travel and hotel stay that will get dearer.
Not just that, passengers travelling in all AC classes and first class will have to pay charges in addition to the recent hike in train fares with the General Budget bringing journeys in them under the ambit of service tax.
With this move, passengers would have to pay over three per cent over and above the recent train fare increases.
While public transport in general has been kept in the negative list, Railway officials said that first class and air-conditioned coaches will now be under the service tax net.
Gold and platinum will also become more expensive as the customs duty in imported standard bar has been hiked to 4 per cent from 2 per cent. The duty on non-standard gold bar has been hiked to 10 per cent from 5 per cent earlier.
In the budget, Pranab proposed increasing the customs duty on import of completely built cars and Sport Utility Vehicles to 75 per cent from 60 per cent (3,000cc engine capacity for petrol and 2,500 cc for diesel vehicles).
Moreover, excise duties for petrol cars with engines under 1,200 cc and diesel cars with engine capacity under 1,500 cc but the length exceeding four metres have been increased to 24 per cent from 22 per cent and a fixed duty of Rs 15,000.
Petrol and diesel driven vehicles having length exceeding four metres and engine capacity of over 1,200 cc and 1,500 cc respectively will now be charged with an ad valorem duty of 27 per cent instead of the earlier 22 per cent and a fixed duty of Rs 15,000.
Imported bicycles will also become more expensive as customs duty has been hiked to 30 per cent from 10 per cent, while the same for bicycle parts has been increased to 20 per cent from 10 per cent.
"Cost of most of the services and goods will increase for the common man with the increase in service tax and excise duties," Ernst & Young Tax Partner Saloni Roy said.
The Finance Minister has taken these steps given the tough fiscal position, Roy said.
(With additional information from PTI)