'Achche Din' Ya 'Mehange Din'? Petrol, diesel and LPG rates raised; new cess makes services costlier

In a double blow, eating out, phone bills, internet, movies, healthcare and banking transactions will cost more from today after a new tax came into force even as a steep hike in price of petrol, diesel, ATF and non-subsidised LPG was also effected on Wednesday. Finance Minister Arun Jaitley had in his Budget for 2016-17 proposed a 0.5 per cent Krishi Kalyan Cess on all taxable services, which came into effect from today.

With this, effective rate of service tax, which is leviable on movie tickets, restaurant bills, credit card and banking transactions, phone bills and healthcare among others, now is 15 per cent.

Jaitley had in his last Budget increased the Service Tax rate from 12.36 per cent to 14 per cent, effective June 1, 2015. From November 15, 2015, a 0.5 per cent Swachh Bharat Cess to fund Prime Minister Narendra Modi’s cleanliness drive, was imposed on all services, taking the effective rate to 14.5 per cent.

Experts says, the service rate is being in phases increased to bring it closer to the expected goods and services tax (GST) rate of 17-18 per cent. Also from today, petrol price was hiked by a steep Rs 2.58 per litre and diesel by Rs 2.26 a litre, the third increase in rates in five weeks.

A litre of petrol in Delhi is now at a year’s high of Rs 65.60 while diesel is priced at Rs 53.93 a litre. Since March, this is the fifth increase in auto fuel rates on global cues. After discounting the April 16 reduction in rates by Rs 0.74 a litre in petrol and Rs 1.30 in diesel, petrol prices have jumped by Rs 8.99 per litre since mid-March and diesel by Rs 9.79.

When the oil prices slumped in second half of 2014 and 2015, the government hiked excise duty on petrol and diesel nine times to mop up gains which should have gone to consumers. In all, it raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47.

Following the auto fuel prices, aviation turbine fuel or jet fuel price was today hiked by a steep 9.2 per cent, a move that is likely to make air travel costlier. In the fourth straight monthly increase in rates on global cues, ATF price in Delhi was hiked Rs 3,945.47 per kilolitre, or 9.2 per cent, to Rs 46,729.48 per kl, the oil companies announced.

The hike comes on back of a 1.5 per cent increase effected on May 1 and a steep Rs 3,371.55 (8.7 per cent) hike on April 1. Prior to that, rates were hiked by steep 12 per cent, or Rs 4,174.49, on March 1.

Simultaneously, the oil firms raised prices of non-subsidised LPG, which consumers buy after exhausting their quota of 12, by Rs 21 per 14.2-kg cylinder, the second monthly increase in rates.
Non-subsidised cooking gas (LPG) now costs Rs 548.50 in Delhi as against Rs 527.50 previously. The hike comes on back of a Rs 18 per cylinder increase in price on May 1. Subsidised LPG costs Rs 419.18 per 14.2-kg cylinder in Delhi.