Krishi cess kicks in; daily expenses to rise

With the imposition of Krishi Kalyan Cess (KKC), the total incidence of service tax will increase to 15 per cent, thus making eating out, phone usage, air and rail travel, expensive. 

The Equalisation levy of 6 per cent on cross border digital transactions and a one-time settlement tax scheme for resolving disputes emanating from retrospective amendments to the Income Tax Act will also come into effect from Wednesday. The 4-month Income Declaration Scheme provides one-time opportunity to domestic black money holders to come clean by paying tax and penalty of 45 per cent on such assets will open on Wednesday. However, the scheme is not meant for those who have earned money through corruption. 

Last year the government had launched a similar scheme giving opportunity to people having unaccounted assets abroad to come clean by paying taxes and penalty. The Equalisation levy or 'Google tax' in common parlance will apply only on payments relating to online advertisements.

In April, Internet and Mobile Association of India (IAMAI) said that levy on online ad revenues of foreign companies would "severely raise the cost of doing business" for Indian tech start-ups. Another major budgetary proposal, the Direct Tax Dispute Resolution Scheme, which seeks to resolve cases pending in various courts, tribunals, arbitrations or are in mediation under the Bilateral Investment Protection Agreement (BIPA), will take effect from Wednesday. 

The scheme provides an opportunity for settlement of cases emanating from retrospective amendment of tax laws, by asking companies to pay the basic tax demand and get waiver on interest and penalty. 

Experts view the scheme as a big step towards tax reform and hope it would act as a breather for firms like Vodafone and Cairn, that face multi-billion-dollar tax liability following retrospective tax amendments made in 2012.