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New service tax rate of 14 pc applicable from today

India TV Business Desk June 01, 2015 7:21 IST
India TV Business Desk

New Delhi: The new service tax rate of 14 per cent will come into effect from today, a move that will make eating out in restaurants, insurance and phone bills expensive, among many other things.

The service tax was earlier levied at the rate 12.36 per cent including education cess.

The new rate of 14 per cent was announced by Finance Minister Arun Jaitley in Budget for 2015-16.

Service tax is levied on all services, expect a small negative list. The hike in service charge is likely to affect common people as tax is levied on railways, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.

ALSO READ: Education cess ineffective from today

In the Railways, 0.5 per cent hike will be brought under effect from today in the AC and First Class fare and freight charges. At present, 3.7 per cent service tax is levied on train fares for AC Class, First Class and freight. From today onwards, this will go up to 4.2 per cent.

Jaitley had in his Budget speech said that the raise is aimed at facilitating smooth transition to the Goods and Service Tax (GST) system.

"To facilitate a smooth transition to levy of tax on services by both the Centre and the states, it is proposed to increase the present rate of service tax plus education cesses from 12.36 per cent to a consolidated rate of 14 per cent," Jaitley had said in the Budget speech.