In the union budget for 2012-13, Finance Minister Pranab Mukherjee had proposed to hike service tax to 12 percent from the earlier rate of 10 percent. The new rate came into effect from April 1 onwards.
The hike in taxes has made most of the services expensive - including eating out, traveling, phone calls, coaching classes, advertisements, health clubs, dry cleaning, beauty parlour and life insurance.
The government targets to get an additional revenue of INR18,600 crore through the two percent increase in service tax.
Hike in other indirect taxes like customs, excise and import duties will also affect the household budgets hard.
About 82 percent of women find finances getting tighter, stating that it is tougher to manage the household budget due to hike in the prices of big-ticket appliances such as washing machines, dishwashers, refrigerators and air-conditioners, according to a survey conducted by the Associated Chambers of Commerce and Industry (ASSOCHAM).
The increase in excise duty from 10 percent to 12 percent will result in higher prices of household items like processed foods, beauty products and kitchen appliances.
Nearly 72 percent of women surveyed by ASSOCHAM said that due to hike in import duty, the price of jewellery is set to rise.
Import duty on gold is increased to 4 percent. Import duty on polished gem stones have also been increased. Also, if the purchase value exceeds INR2 lakh, payment by cash will face an immediate tax of 1 percent.
The hike in indirect taxes is estimated to result in net revenue gain of INR45,940 crore to the exchequer.