Budget 2016 India: Cars, air travel, movies & eating out to be costlier

Cars, locally made mobiles, branded garments, air travel, aerated drinks, cigarettes and smart watches are the among items that will be costlier while footwear, solar lamps and routers are slated to cost less following changes in tax structure in the Budget 2016-17.

As a result of a new levy, Krishi Kalyan cess, on all services, activities including eating out, watching movies in theaters and payment of bills, will also become more expensive.

Continuing the trend set by his predecessors, Finance Minister Arun Jaitley today came down heavily on smokers and tobacco consumers by imposing up to 15 percent excise duty on all tobacco products.

"To discourage consumption of tobacco and tobacco products, I propose to increase the excise duties on various tobacco products other than beedi by about 10 to 15 percent," Jaitley said in his Budget speech.

Potential car buyers will have to shell out more - from as low as Rs 3,000 to over Rs 1 lakh - on new purchases as the Finance Minister announced infrastructure cess of up to 4 percent on vehicles.

"The pollution and traffic situation in Indian cities is a matter of concern. I propose to levy an infrastructure cess, of 1 percent on small petrol, LPG, CNG cars, 2.5 percent on diesel cars of certain capacity and 4 percent on other higher engine capacity vehicles and SUVs," Jaitley said.

Petrol/LPG/CNG driven vehicles of length not exceeding 4 meters and engine capacity not exceeding 1,200cc would attract a cess of 1 percent.

Diesel driven vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,500cc will attract a cess of 2.5 percent, while other higher engine capacity and SUVs and bigger sedans would be levied at 4 percent.

Moreover, cars priced above Rs 10 lakh will also attract tax of 1 percent at source.

"I also propose to collect tax at source at the rate of 1 percent on purchase of luxury cars exceeding value of Rs 10 lakh and purchase of goods and services in cash exceeding Rs two lakh," Jaitley said.

After the Budget announcements, air travel will become expensive due increase in excise duty on aviation turbine fuel (ATF) to 14 percent from 8 percent besides the additional levy of Krishi Kalyan cess.

Soft drinks and mineral water will also be dearer as Jaitley proposed to hike excise duty on "water including mineral water, aerated water containing added sugar or sweetening matter" to 21 percent from 18 percent earlier.

Branded readymade garments costing Rs 1,000 or more will become costlier as the excise duty on them has been increased to 2 percent without CENVAT credit from nil earlier.

Customs duty on imported imitation jewelery has gone up from 10 percent to 15 percent while customs duty on industrial solar water heater has increased from 7.5 percent to 10 percent which will make these items costlier.