​Tax is depriving us from going out shopping and eating

There is not much we ask from our regular weekends. A day’s downtime after a hectic week definitely calls for some indulgence. So most of us look out for small joys like eating out or catching up on a movie. However, even a little bit of fun can be taxing.

Loosening your purse strings in the pursuit of small joys in totally justified. City life is such that weekend outings mean mall visits, restaurant trips, movie time, etc. As long as we are having a good time and it is all falling well within our budget, all of us enjoy the party. But wait? Don’t judge the scene by rate cards alone. Often not featured on the rate cards, this silent but influential factor called tax is majorly responsible for burning a hole in our pockets.

1) Service tax on eating out!
Well eating in an air conditioned restaurant is an expensive affair. With the hike in food prices, many restaurants have revised the rates on their menu cards. In addition to this, the service tax, which is levied by the government, makes food bill heavier and your wallet lighter. Notably, 14% service tax has to be paid on 40% of the total billing amount, which is nearly 4.94%. This is calculated separately while billing, but ensure that you do not overlook these charges while planning to dine out.

2) What about VAT?
Value Added Tax (VAT) is levied by the government and chargeable on all goods and services, wherein value is added before it is provided to the consumer. The food prepared in restaurants falls under that category. VAT rates differ from state to state. Therefore, you’ve to pay applicable VAT depending on in which state you are currently availing the services. Again, this does not appear in the rate cards and is charged on the final bill. So if you have a budgeted outing plan, VAT can be the spoiler.

3) Entertainment time is also tax time!
Planning to go for a movie or a standup comedy show? Well, be prepared to not only pay for getting entertained but part with additional money as entertainment tax. The percentage of entertainment tax differs from state to state. Entertainment tax is also applicable on theatre and comedy shows. Now that is definitely not an entertaining piece of information. But there is no escape except for scrapping that outing plan!

4) Not helping you get rich, that luxury tax!
Are you in a mood to splurge on yourself? You may book a session at the spa, go for a gym or swimming session at the health club followed by sauna! Or maybe check into a hotel room for some serious unwinding. Now that’s luxury indeed and of course, staring right at you is the luxury tax. Oh well, living the rich life can indeed be taxing, don’t you agree?

5) Lets go to the mall and pay VAT!
Need some retail therapy? That’s a good idea to pay some more VAT. That perfectly fitting jacket, the bag on discount or those pair of shoes you feel in love with at the first sight, all of them had you paying VAT before you got to own them! Maybe it’s time to stop considering shopping unless it’s necessary because VAT can potentially kill your monthly budget.

All of us need to be aware about the taxes levied on various products and services that we avail regularly. While we are budgeting for our expenses, this is a factor which cannot be ignored. Ensure the tax components are accounted for in your expenditure plans. You may have to cut down on the fun part but at least you won’t be left surprised on overshooting budgets. Taxes are unavoidable but better planning is entirely our game. Good luck with that!
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(About the author: Rajiv Raj is the Director and Co-Founder of www.creditvidya.com)