The Union Cabinet has approved the setting up of postal banks. Postmen will be given smartphones and IPads, to be used to provide banking services such as opening your Post Office savings account or Recurring Deposit (RD). It is also expected that these postal banks will start selling Mutual Funds and Insurance. There are more than 1.5 lakh post offices in India and news reports state that 650 branches of postal banks will be set up across the country. The postal banks will be equipped with micro-ATMs for enabling cash withdrawals and other digital transactions. When banks tie up with the postal department for selling their products, bank ATMs and mobile banking apps could become points of access for postal services. Rural areas where people have never seen a bank branch but have a Post Office, will benefit from this move.
Taxing Times
Everyone is talking about it. What? The taxes, of course. There are a number of taxes that are kicking in today. Read all about them here.
- Google Tax or is it FB Tax? – Known as the equalisation levy, this tax is applicable to foreign e-commerce companies earning revenues in India. The tax was introduced in this year’s Union Budget and is aimed at taxing foreign firms who are not registered in India but earn money from Indian advertisers. The Government has fixed this levy at 6% of any payment that exceeds Rs.1 lakh a year, from an Indian company to a non-resident for online advertisements. For example, Google collects money from Indian firms for ads. This will now get taxed. This tax might get passed on to the consumers, that is, the Indian firms that are buying these ads. The Indian companies have to ensure that the tax has been deducted and reported. This tax will apply to all foreign entities offering advertisement services, such as Facebook and Twitter. The really sad part is that the Government might consider extending this tax to services like songs and movie downloads, e-book downloads and software downloads. Experts believe that it might also get extended to online sale of goods and services. If that happens, buying stuff online is going to become an expensive affair.
- Kalyan Ho! – In the Union Budget this year, the Government introduced the Krishi Kalyan cess. This cess will push the service tax rate to 15% from 14.5%. As you might know, service tax is applicable to all taxable services. Now, what are these services? The list is pretty long but the ones that might affect you every day include restaurants, insurance, gyms, mobile services and air travel. For instance, if you had spent Rs. 20,000 to purchase an Insurance Policy, your service tax would have come to Rs. 2900. Now you need to shell out Rs. 3000.
- Costly Ride – If you are planning to buy a new car, you might not like this. The Government imposed an infrastructure cess in the Budget this year. This applies to petrol and diesel cars. The cess will be 1% for small cars with an engine capacity of 1200c or less. For cars of 1500cc, the cess will be 2.5%. Planning to buy an SUV? Pay 4% cess. If the car costs more than Rs.10 lakh, you have to pay an additional tax of 1% at source.
So, the next time you avail of any service, check the bill. And here’s a tip – service charge is not the same as service tax. A service charge is levied by the service provider (such as restaurants or fitness centres) and there are no restrictions on this amount. It is NOT collected by the Government. So, the next time you see a huge service charge on your bill, see if it is worth paying such a big amount for the service.