| Feb 2, 2018, 17:15 IST
Tax on services is what you should grudge more than income tax

Gabbar Singh Tax, the name Rahul Gandhi gave GST, better describes what most Indians think of the income tax. It’s the tax they resent most. However, over the years service tax has come to bite middle-class Indians even more deeply and widely than income tax. Within just two decades of introduction, its rate has risen over 3 times (income tax rates have fallen) and its coverage has gone up infinitely (from 3 services to all but a few) when millions of Indians have gotten out of the income-tax net. No wonder, its collections have risen 676 times, vis-a-vis 23 times rise in income tax.

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S in GST is Service Tax


With GST coming into effect from July 1, 2017, service tax has ceased to exist— as a separate tax. But services continue to be taxed, as they should be because they make up the largest chunk, 62% of GDP. As an integral part of GST, revenue from tax on services will continue to grow faster than income tax collections for several year.

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