Budget 2016: Most water-cooler conversations in February are centred on Budget expectations. The finance minister may use Budget FY17 as an opportunity to bring in changes in the service tax regime, aligning it with GST. The government may raise the rate of service tax to 16-17% to bridge the gap between the current service tax rate and proposed GST rates. The Budget may rationalise exemptions available under service tax to align with the minimal proposed exemptions under GST. With the increase in rate and taxable base widened, the Budget may alter other areas to keep up with its mantra of ease of doing business. For example, service tax exemption threshold may be raised from the current Rs 10 lakh to a more substantial Rs 25 lakh. This will provide respite to small businesses.
