Budget Reactions: Mavcomm Group sees no major impact of service tax hike

By Mr. Siddhartha Upadhyay, Director, Mavcomm Group

The increase in service tax to 12% will not have any major impact on services industry and I welcome the step taken by Honourable Finance Minister. It is notable that Services sector is contributing majorly to the growth of the economy. The share of services in India's GDP has increased from 33.5% in 1950-51 to 55.1% in 2010-11 and to 56.3% in 2011-12. If construction is included, the share increased to 64.4% in 2011-12.

The growth is estimated to be 2.5% in agriculture, 3.9% in industry and 9.4% in services.

I forecast a similar role for Services sector as the economy moves forward in its growth trajectory. The steps taken by government to encourage private investment and entry of FDI into aviation and certain other sectors will further increase the opportunities for services sector.