Though the family finds the budget wallet-friendly, the service tax being levied on the hospitality and travel industry will, for sure, leave some holes in their pockets.
Though the family finds the budget wallet-friendly, the service tax being levied on the hospitality and travel industry will, for sure, leave some holes in their pockets.
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It was all smiles for Senthil Kumar yesterday evening as he drove from his office to pick up his wife Shobha from her office. Finance minister Pranab Mukherjee has just presented his sixth budget in parliament and Kumar's smile broadened as he thought about the flexibility the new budget was giving him to take care of his family
of six.
A few nice things: The new budget brings smiles to some and frowns
to others. Representation Pic
Kumar wanted to build a house but was worried about the rate of interest on bank loans since he expected it to go up because of inflation and the ballooning fiscal deficit. His general knowledge of the economy told him that the finance minister would resort to jugglery of sorts in order to reduce the fiscal deficit hovering around 4.6 per cent, while taming inflation, which had reached double digits, resulting in an increase in bank rates.
Can't please them all: Finance Minister Pranab Mukherjee arrives at
Parliament House to present the Union Budget 2010-11 yesterday.
Pic /Rajeev Tyagi
However, Pranab Da sprang a pleasant surprise by going for public borrowings of less than Rs 40,000 crore than earlier expected, because of which bank rates will remain low. The minister also announced 1 per cent interest subvention on home loans up to Rs 15 lakh.
Now that he was sure he could fulfill Shobha's dream of having a car of her own, he does not want to miss the chance of buying one because there has been no proposed change in central excise duty, which is at 10 per cent for cars, besides the other 130 items being roped into the tax net with a nominal rate of 1 per cent.
However, Kumar's son Aditya, who wants a mobile phone, is not as happy as Manju, his sister, who was planning to go on a shopping spree for clothes, since handsets are among the items that are included in the tax net with 1 per cent central excise duty. Branded garments on the other hand, will be dearer since they face an optional tax, which would be converted into a mandatory levy at a unified rate of 10 per cent.
However, this will mean little to Aditya, since his friend, who is in Hong Kong, has promised to buy him some electronic items including an iPad, and the peak rate of customs duty on these gadgets remains unaltered.
If Kumar should be unhappy for any reason, it may be because he wanted to get his ailing mother treated in a good hospital. Treatment at such hospitals however, is expected to become dearer with a service tax of 10 per cent being imposed on all services provided by hospitals with 25 beds or more. This includes hospitals with central air-conditioning and those conducting diagnostic tests.
Moreover, Kumar has decided to scrap a round trip by air to Goa, which he had been planning with friends, since air tickets will cost more now with the service tax on domestic sectors being increased by Rs 50, and by Rs 250 for economy class on international sectors. The service tax would be a flat 10 per cent on higher classes. Service tax will now cover hotel accommodation above Rs 1,000 per day, and for air-conditioned restaurants serving liquor.
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