The Finance Minister and the Prime Minister categorically denied report by certain Indian media that taxes will go up and that taxman will follow you everywhere to squeeze your wallet. 

However, the Government is under pressure to solve the budget deficit problem and the huge problem from escalating import cost of crude oil and other petroleum products.

According to media report, after the budget, you might have to pay more to travel, or install new software, or send a parcel. Manmohan Singh’s ‘aam aadmi’ government will make a tax on services its main cash cow. Services account for 54% of India ’s economy, but taxes on services now contribute a meagre 3% to total revenue. 
Finance minister P Chidambaram says he’s confident of funding the ambitious spending programme outlined in the UPA’s common minimum programme (CMP). How? "Wait for the budget," he told journalists. But here is a sneak preview. 

Chidambaram is likely to extend the scope of service tax to more than the 58 services it’s currently confined to. 

A hike in the tax rate from today’s 8% to perhaps 12% or 14% might be gradually implemented. 

To keep the prices of services in check, an offset mechanism is on the cards. Even then, you could land up paying more for many services you consume, as service providers pass on taxes to users. 

This pass-through effect is already visible on telephone or laundry bills and accountants’ fees. 

North Block’s blueprint to boost service tax revenue is based on suggestions made by Vijay Kelkar’s committee on tax reforms.