Finance minister Arun Jaitley may hike service tax rate to 16-18% from the current 15% in the budget, due on Wednesday, as a precursor to the goods and services tax (GST) rollout.
The move, that will make flying, eating out, phone bills and a host of other services expensive, would be an attempt to take the rates closer to the proposed tax slabs for GST.
GST, which will subsume central and state levies like excise duty, service tax and value added tax (VAT), is scheduled to be rolled out from 1 July. The tax slabs decided for the GST are 5, 12, 18 and 28% and taking service tax closer to one of the slabs is a logical move in the budget, tax experts said.
