Print industry disappointed with service tax

The finance ministry, on 19 May, notified the increased service tax rate of 14 per cent effective from 1 June 2015 onwards.

20 May 2015 | By Samir Lukka

With the notification, several services including cable and DTH services, beauty parlour charges, courier service, laundry services, ordering stock broking, asset management and insurance will become expensive.
 
In the Budget 2015-16, the government had hiked the service tax to 14 per cent from the current 12.36 per cent. The government issued a comment that “To facilitate a smooth transition to levy of tax on services by both the Centre and the states, the service tax rate is being increased from 12 per cent plus education cesses to 14 per cent.
 
Dev Nair, the president of AIFMP said, "The contractors will charge us 14% and we cannot get a set off except the printers who are under excise exemption."
 
Meanwhile, even the OOH (Out of Home) industry has been "disappointed" with the increase in service tax to 14 per cent. Leading OOH industry leader said, the Union Budget has been a “set back”. “The 12.36 per cent tax was already on the higher side. No marketer is going to increase spend just because service tax has increased. So, for the advertising industry this increase is going to have a big impact.
 
Post the Union Budget, experts in the education segment were upset with the decline in budgeted expenditure. And so, the plan outlay for the department of school education and literacy has been reduced from Rs 51,828 crore in last year’s budget to Rs 39,038.50 crore. The department of higher education has seen its allocation cut from Rs 16,900 crore to Rs 15,855.26 crore. Plan outlay for the Sarva Siksha Abhiyan has declined from Rs 28,258 crore to Rs 22,000 crore.
 
Plan outlay for secondary education has declined from Rs 8,579 crore to Rs 6,022 crore. The funds allocated to the UGC have stagnated at last year’s levels, which amounts to a cut in real terms. Technical education has witnessed fund cuts to the tune of Rs 434 crore. Science education and research would suffer as the allocation for the Indian Institutes of Science Education and Research has been cut by 25 per cent. The total expenditure on education – Rs 68,968 crore - is 3.88 per cent of the central budget. This is a far cry from the demand of the student community that 10 per cent of the budget to be spent on education.
 
PrintWeek India's view: With the government paring down print budgets; and inclined to eGovernance, the signs for print are worrisome.