In a sharp contrast to what was expected before the presentation of annual budget 2017-18, the Finance Minister on Wednesday announced the withdrawal of service charge on rail tickets booked through government-run IRCTC. He, however, did not change the current tax rates on all other services.
This was a little surprising as earlier reports had indicated that the Finance Minister could hike service tax rate to 16-18 per cent from the current 15 per cent.
Any hike on service tax would have made flying, eating out, phone bills and a host of other services more expensive. And, as Assembly elections in five key sates are round the corner, the government chooses to stay away from any anti-consumer policy change.
Uttar Pradesh, Uttarakhand, Goa, Punjab and Manipur are the states where elections will be held between February and March 2017.
Not only this, the government also did not make any announcement on the rail fare hike. According to reports, the Railway Ministry was mulling for a special cess on train fares to create a dedicated Rs 1.2 lakh crore safety fund.
It was reported that fare for AC one-tier and two-tier could see a marginal increase, passengers travelling on second class and AC three-tier could be hit harder because of a proportionately lower fare base.
Last year in September, Indian railways had increased the fare for its three premium trains - Rajdhani, Duronto and Shatabdi.
Meanwhile, Arun Jaitley made announcements in the union budget that will offer some relief to the common man after the hardship demonetisation brought to people a few months ago.
Jaitley announced alterations in the tax slabs that will help save people with the income between Rs 2.5 lakhs and Rs 3 lakhs about Rs 12,500 annually after he reduced the tax rate to 5 % from the existing 10 per cent.
Jaitley also proposed a new surcharge of 10 per cent on incomes between Rs 50 lakh and Rs 1 crore and raised duties on cigarettes and pan masala while stepping up allocations for infrastructure, rural, agriculture and social sectors.
Breaking from the past, Finance Minister Arun Jaitley presented a historic Budget in which the railway budget has been merged and the date advanced by a month, retaining the 15 per cent surcharge on taxable income above Rs 1 crore.