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Reuters/Danish Siddiqui
Pricey affair.
PAY UP

Living in India just got a little more expensive

By Madhura Karnik

In case you were trying to save up, good luck!

Starting today (June 1), the Indian government will begin levying the Krishi Kalyan (farmer welfare) cess on taxable services.

This 0.5% cess was introduced by finance minister Arun Jaitley in his budget speech on Feb. 29. ”Proceeds from this would be exclusively used for financing initiatives for improvement of agriculture and welfare of farmers,” Jaitley said in the speech.

Indians already pay a 14% service tax and a 0.5% Swacch Bharat (Clean India) cess on over 100 services.

Indirect taxes and charges such as these are an important part of the government’s income from taxation. Of the Rs14.4 lakh crore ($213 billion) of taxes collected by the Indian government in the last financial year, 44.4% came from indirect taxes.

Here are some services that will be come under the Krishi Kalyan cess:

  • Restaurants
  • Watching a movie in a theatre
  • An Uber or Ola ride
  • Getting a haircut (or any other service in a beauty salon)
  • Air travel
  • Train travel in air-conditioned coaches
  • Using the ATM
  • Mobile phone bill
  • Staying at a hotel
  • Dry cleaning your clothes
  • Attending private tuition or coaching
  • Hiring a photographer
  • Hiring an interior decorator

And there’s more…

Apart from the Krishi Kalyan cess, a new luxury tax on cars will also come into effect from June 1. Jaitley had announced levying a 1% luxury tax on all cars that cost more than Rs10 lakh ($14,839). This tax will be added to the price of the car.

Meanwhile, prices of petrol and diesel were hiked on June 1. Petrol will become costly by Rs2.58 per litre and diesel by Rs2.26 a litre. This means transport costs will rise, affecting the prices of vegetables, fruits, milk and other food products, among others. To add to household woes, the cost of an LPG cylinder—used for cooking across the country—was also increased by Rs21.

Aviation fuel prices were also hiked by 9.2%.

These fuel price increases are mainly because global oil prices are inching up after months of staying benign.

“The current level of international product prices of petrol and diesel and the rupee-dollar exchange rate warrant increase in price of petrol and diesel, the impact of which is being passed on to the consumers with this price revision,” Indian Oil, the country’s largest fuel retailer, said in a statement.