Eating out, phone calls to get costlier

Eating out, talking on your mobile phone, entertainment and even paying premium on your insurance bill are among the gamut of activities that will cost more. Finance Minister Arun Jaitley has proposed to raise the service tax from the existing 12.36 per cent to 14 per cent.

The new rate shall come into force from a date to be notified by the Centre after enactment of the Finance Bill, 2015.

Telecom companies said they would pass on the burden to end users. According to COAI Director-General Rajan S Mathew, phone bills would be higher by half a per cent. In his Budget speech, Jaitley said the tax on services was proposed to facilitate a smooth transition to the proposed Goods and Services Tax regime.

To broaden the tax base, the Finance Bill 2015 also reviewed the negative list of services. Items in the negative list do not attract service tax.

Services provided by way of amusement, recreation by means of rides, gaming devices and theme parks will attract service tax, according to the new broadened list. The new exemptions included life insurance services provided by way of Varishtha Pension Bima Yojana, the newly launched pension scheme.

Services provided by way of retail packing and labelling of fruits and vegetables will also be exempted in the new list. Transportation of patients will also be exempted from service tax, among other exemptions.

Property prices will rise slightly with the proposed hike in service tax, according to real state industry associations CREDAI and NAREDCO.