Budget may hike service tax, make eating out, movies and flying costlier

January 27, 2017 19:26

Finance Minister Arun Jaitley could raise the service tax rate in the Budget to be presented on February 1, a move that will increase the cost of eating out, going to the movies or flying.

Two senior government sources said that the existing rate of 15%, which includes two cesses, could be raised by another 0.5% to 1%.

A rise in service tax could give the government some elbow room to offer cuts in personal income tax or spend more to revive private consumption that received a shock after Prime Minister Narendra Modi pulled out high-value banknotes from the economy in November.

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