Budget 2021

Union Budget 2015-16: Smoking, eating out, air travel to be costlier

An increase in service tax rate in the Union Budget 2015-16 would make costlier a whole lot of activities including eating out, air travel and paying bills. File photo  

Smoking and consumption of other tobacco items is set to become more expensive, while increase in service tax rate would make costlier a whole lot of other things including air travel, eating out and paying bills.

Those which will turn cheaper include leather footwear, locally made mobiles, computer tablets, microwave ovens, peanut butter, packaged fruits, ambulance service and agarbattis.

Continuing the trend set by his many predecessors, Union Finance Minister Arun Jaitley on Saturday came down heavily on smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2015-16.

Citing need for promotion of public health, Mr. Jaitley said: “Excise duty on cigarettes is being increased by 25 per cent for cigarettes of length not exceeding 65 mm and by 15 per cent for cigarettes of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos.”

He made changes to the compounded levy scheme applicable to pan masala, gutkha and certain other tobacco products.

As per the Budget proposals, excise duty on cut tobacco is being increased to Rs. 70 per kg from Rs. 60 per kg earlier.

On the increase of Service Tax, Mr. Jaitley said: “To facilitate a smooth transition to levy of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cesses from 12.36 per cent to a consolidated rate of 14 per cent.”

Subsequently, eating out at restaurants, stay in hotels, air travel, cable and DTH services, visiting beauty parlours, courier service, credit and debit card related services, dry cleaning of clothes, stock broking, asset management and insurance and a host of other activities that require availing of service from another party will become expensive.

Mr. Jaitley, however, spared the common man from price hikes on many commonly used day-to-day items by reducing duties.

Leather footwear priced above Rs. 1,000 per pair will cost less as excise duty has gone down to 6 per cent from 12 per cent earlier.

Packaged fruits and vegetables will also become cheaper as pre-cooling, ripening, retail packing and labelling of these items have been exempted from service tax.

Similarly excise duty on locally made mobile phones, LED/LCD panels, LED lights and LED Lamps have been cut.

Microwave ovens are likely to become cheaper as a key component, magnetron, has been exempted from basic customs duty as compared to 5 per cent earlier. Refrigerator prices could also come down as import duties on various components have been reduced.

Similarly, solar water heater will be less expensive with excise duty on the item has been changed from 12 per cent to nil without CENVAT credit or 12.5 per cent with CENVAT credit.

Agarbattis prices will come down as it will now attract nil excise duty with Mr. Jaitley announcing “full exemption from excise duty is being extended to captively consumed intermediate compound coming into existence during the manufacture of Agarbattis”.

Prices of pacemakers are expected to come down as specific materials used in its manufacturing have been exempted from duties.

Ambulance and ambulance services are also expected to come down as excise duty on chassis of such vehicle has been cut to 12.5 per cent from 24 per cent, while all ambulance services provided to patients are being exempted from service tax.

A visit to museum, zoo, national park, wild life sanctuary and tiger reserves will also become pocket friendly with the Finance Minister exempting such activities from the service tax.

The other items that will become expensive include completely built imported commercial vehicles as the effective basic customs duty has been hiked to 20 per cent from 10 per cent earlier.

Plastic bags and sacks will also become costlier as tariff rate of excise duty has been hiked to 18 per cent from 12 per cent. Cement will also become more expensive with excise duty being increased to Rs. 1,000 per tonne from Rs. 900 per tonne earlier.

Aerated, flavoured drinks and packaged water will cost more as excise duty has gone up to 18 per cent from 12 per cent earlier.

Business and executive class air travel will also become expensive with the Budget proposing to reduce abatement for classes other than economy and “service tax would be payable on 60 per cent of the value of such higher classes”.

Visit to amusement and theme parks as well as music concerts will also become expensive as they will now come under service tax net.

Following is a list of what will be costlier and cheaper:

Expensive Cheaper
Cigarettes and other tobacco products Leather footwear priced above Rs 1,000 per pair
Completely built imported commercial vehicles Locally made mobile phones, LED/LCD panels, LED lights and LED Lamps
Cement Solar Water heater
Aerated, flavoured drinks and packaged water Pacemakers, ambulance and ambulance services
Plastic bags and sacks Tablet computers
Business and executive class air travel Agarbattis
Visit to amusement and theme park Microwave ovens
Music concerts Refrigerator compressors
Liquor, chit fund Peanut butter, packaged fruits and vegetables
Lottery Visit to museums, zoos and national parks


Our code of editorial values

Related Topics
This article is closed for comments.
Please Email the Editor

Printable version | Jan 18, 2022 5:19:12 PM | https://www.thehindu.com/business/budget/union-budget-201516-smoking-eating-out-air-travel-to-be-costlier/article6945141.ece

Next Story