Travel, tourism & health costlier

In addition, treatment and health check-up in hospitals will also go up. Hotel accommodation, in excess of the declared tariff of Rs 1,000 per day, will come under the ambit of the tax, although there will be an abatement of 50 per cent.

“The effective burden is only 5 per cent of the amount charged,” Finance Minister Pranab Mukherjee said while presenting the budget on Monday.

Air-conditioned restaurants that have licence to serve liquor will also be under the service tax net. After an abatement of 70 per cent, the effective burden will be 3 per cent of the bill. The minister, however, retained the overall service tax rate at 10 per cent.

International standards

Mukherjee said the service tax on air travel will be raised by
Rs 50 in the case of domestic air travel and Rs 250 on international journeys by economy class.

The domestic air travel on higher classes will be taxed at the standard rate of 10 per cent to bring it on a par with journeys by higher classes on international air travel.

Airlines that are poised to foist the tax burden on the passengers are already proposing hikes. Jet Airways, for instance, has increased fares because of a jump in jet fuel.

The service tax on health check-up or treatment, imposed in 2010-11, will now be replaced with a tax on all services provided by hospitals with 25 or more beds having central air-conditioning facility, which is likely to increase hospital bills considerably.


Despite levying the service tax on high-end treatment, Mukherjee said there will be an abatement of 50 per cent so that the actual burden is kept at 5 per cent of the value of service.

The finance minister said the levy will be extended to diagnostic tests of all kinds with the same rate of abatement. All government hospitals will be outside this levy.

Items such as automobiles (hybrid electrical vehicles, compressed natural gas kits), low-end housing loans, diapers and sanitary napkins, homeopathic medicines, agarbatti, solar lantern, LED lights, raw silk materials, syringes and needles, ink jet, laser jet printers, agricultural machinery, irrigation equipment and cattle feed will become cheaper.

Legal services, branded jewellery, branded clothes will get dearer while there will be no change in prices of cigarettes and consumer durables like TV, fridge and washing machines.

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