New Service tax rate w.e.f 1st June 2016
Service tax is paid by the service provider or the recipient of services in some cases.When service tax was introduced it was applicable only on few services.But,with the passage of time almost all services have been brought in the service tax net.Now,only the services mentioned in the negative list of services as provided by government, are exempt.
The service tax was just 5% when introduced ,but now it has increased 3 times and reached to 15%.
To have a look at the increasing trend of service tax rate over the past few years you can refer Service tax rate chart since its introduction.
In Budget 2015 ,the service tax rate was raised from 12.36% to 14%. Also,a new cess called the “Swachh Bharat Cess” @ 0.5% was introduced in November 2015,that increased the service tax rate to 14.5%.
Now,as per the Finance bill 2016 ,another new cess known as the “Krishi Kalyan Cess” has been introduced and shall be levied @ 0.5 % on the amount of the taxable services.The amount collected through Krishi Kalyan Cess shall be used for farmer welfare and agriculture development.This cess will be levied over and above the Service tax i.e. 14% and the Swachh Bharat cess i.e. 0.5% of taxable service value.So,the effective service tax rate shall be 15% w.e.f. 1st June 2016.
This increase has been made to bring the service tax rate closer to GST that is expected to be 17-18% when enforced.
The effect of increased service tax has been depicted through a simple example :
(i) Taxable service amount= Rs.10000
(ii)Service tax @ 14% of 10000 = Rs.1400
(iii)Swachh Bharat Cess @ 0.5% of 10000 = Rs.50
(iv)Krishi Kalyan Cess @ 0.5% of 10000 = Rs.50
Total Service tax payable = (ii)+(iii)+(iv)= 1400+50+50 = Rs.1500
So,this increased rate means you need to shed more money out of your pockets for any service that attracts service tax.This rise in the service tax rate will definitely affect your wallet by adding on to your expenses like :
- Restaurant bills.
- Mobile bills.
- Air ticketing prices.
- Insurance policy premium.
- Loan processing fees.
- Bank service fees.
- Credit card bills.
- Courier charges.
- Financial service fees.
- Shopping on E-commerce portals …….and the list goes on.
Be prepared,next time you plan for a holiday or eating out with friends or family,all has become much more expensive than it used to be few years back.
Feel free to add your opinion about the increasing service tax rate over the past few years…
Also Read : Service tax on Aggregator’s Services !
A new law, a new tax GST or Goods and Services tax is all set to be introduced that will replace various indirect taxes including Service tax ,so grab exclusive details on GST or Goods & Services tax – Impact on the common man !https://fintrakk.com/service-tax-rate-w-e-f-1st-june-2016/https://fintrakk.com/wp-content/uploads/2016/05/worried-30148_960_720.pnghttps://fintrakk.com/wp-content/uploads/2016/05/worried-30148_960_720-150x150.pngTaxationkrishi kalyan cess,new service tax rate,service tax,service tax changesService tax is paid by the service provider or the recipient of services in some cases.When service tax was introduced it was applicable only on few services.But,with the passage of time almost all services have been brought in the service tax net.Now,only the services mentioned in the negative list...admin email@example.comAdministratorFintrakk