Air, Rail Travel, Eating Out Costly From Today


New Delhi: Get ready to pay more from Wednesday if you are planning to eat out, use your phone, or travel by air and train. A slew of budgetary proposals, including 0.5% agriculture cess on all services, have kicked in from June 1, 2016 making several services costly.

With the imposition of Krishi Kalyan Cess (KKC), the total incidence of service tax will increase to 15%. Krishi Kalyan cess of 0.5% on service tax will be imposed on all AC class train tickets, freight and parcel.

The equalisation levy of 6% on cross border digital transactions and a onetime settlement tax scheme for resolving disputes emanating from retrospective amendments to the Income Tax Act will also comes into effect from Wednesday.

Also, the four-month Income Declaration Scheme which provides one time opportunity to domestic black money holders to come clean by paying tax and penalty of 45% on such assets will be open from Wednesday.

In 2015 as well, the government had launched a similar scheme giving opportunity to people having unaccounted assets abroad to come clean by paying taxes and penalty. The equalisation levy or ‘Google tax’ in common parlance will apply only on payments relating to online advertisements.

Another major budgetary proposal, the Direct Tax Dispute Resolution Scheme, which seeks to resolve cases pending in various courts, tribunals, arbitrations or are in mediation under the Bilateral Investment Protection Agreement (BIPA), comes into effect from Wednesday.

The scheme provides an opportunity for settlement of cases emanating from retrospective amendment of tax laws, by asking companies to pay the basic tax demand and get waiver on interest and penalty.

Experts view the scheme as a big step towards tax reform and hope that it would act as a breather for companies like Vodafone and Cairn, which have been facing multi-billion dollar tax liability following retrospective tax amendments made in 2012.