The new service tax rate of 14% will come into effect from June 1, the government on Tuesday, May 19, said in a move that will make eating out in restaurants, insurance and phone bills expensive, among many other things. The service tax is currently levied at the rate 12.36% including education cess. Top official sources said that the new rate of 14% announced by finance minister Arun Jaitley in his budget for 2015-16 would come into effect next month.
In his budget speech, Jaitley had said that 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 cess from 12.36% to a consolidated rate of 14%.
Service tax is levied on all services, except a small negative list. Advertising, air travel, services of architect, certain type of constructions, credit card, event management, and tour operator are some of the important services which attract tax.
Source: Live Mint