Service Tax will be 15 percent from June 1, 2016


New Delhi: The Krishi Kalyan Cess proposed by Finance Minister Arun Jaitley of 0.5 percent will be applicable from June 1. The cost of most services, including eating out and uber ride, will go up at 0.5% of the total bill which includes new Krishi Kalyan Cess. Now, the service tax will be charged at 15%.

After introducing the 0.5% Swachh Bharat Cess in November, the Union Finance Minister announced in this year’s Budget that the government would levy a Krishi Kalyan Cess to finance activities related to agriculture and build a fund for the welfare of the farmers.

This incidentally is the third time Service tax has been raised in last one year. Earlier, the Service Tax was 12.36 percent which was raised to 14 percent and became applicable from June 15th 2015. Then, from June 1st, Education Cess was of 0.5 percent was added making it 14.5 percent.

Similarly, a “luxury tax” of 1% will be imposed on cars priced above Rs 10 lakh and services valued at above Rs 2 lakh.

A hike in the tax will push up retail prices of almost all everyday products, and services, including air travel, restaurant meals, movie tickets, telecom, credit card, electricity and mobile bills.