New fiscal year pinches you more

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Your life just became more expensive.

With the increase in service tax, from 10 per cent to 12 per cent, proposed by finance minister Pranab Mukherjee in Union Budget becoming effective on Sunday, services such as telephone, credit cards, insurance, hotels, dry cleaning and developing photographs, among others, have become costlier.

The cost of holiday packages also went skyward.

While increasing service and excise duties, Mukherjee also hiked the personal income tax exemption limit from Rs 1.80 lakh to Rs 2 lakh to enable tax-payers to save up to Rs 2,000. But the exemption is hardly a relief as not much money would be left in hand after paying more for services and consumers durables.

The effective rate of service tax would be 12.36 per cent and there are some 120 services, including travel by first-class and air-conditioned rail coaches, couriers, coaching classes, air travel, life insurance, beauty parlour, advertisement, dry cleaning, health clubs and cable TV, that attract tax.

The increased tax will not be levied on admission to entertainment events, access to amusement facilities and travel by radio taxis and auto rickshaws, funerals, burials, mutate services and transport of the deceased.

It will also not be levied on school, university education and approved vocational courses. Coaching and training institutions, however, will continue to be subject to service tax.

The government hopes to mop up Rs 18,660 crore during 2012-13 by way of the hike.

Motor insurance will drive you crazy

Owners of cars, commercial vehicles and two-wheelers will now have to pay more towards insurance. As per the enhanced motor insurance rates that became effective Sunday, owners of cars up to 1,000 cc engine capacity will have to shell out a third-party premium of Rs 784.

It would be Rs 925 for cars with an engine capacity of above 1,000 cc and up to 1,500 cc. For cars exceeding 1,500 cc, the premium will be Rs 2,853 per year.