From Wednesday, eating out, internet and travel becomes costly with the newKrishi Kalyan Cess kicking in.
Finance minister Arun Jaitley had proposed the Krishi Kalyan Cess in this Budget, which is at 0.5% on all taxable services. The new effectiveservice tax could henceforth be 15%.
Jaitley, in his last Budget, had increased the Service Tax rate from 12.36% to 14%. This new rate of Service Tax at 14% was applicable from 1st June 2015. Moreover from 15th November 2015, Swachh Bharat Cess at 0.5% also got applicable. Therefore the effective rate of Service Tax is currently at 14.5% with effect from 15th Nov 2015. It seems, the rate is slowly being increased to bring service tax closer to the expected goods and services tax (GST) rate of 17-18%.
The move impacts your phone bills, dining plan, movies, healthcare, banking transactions.
The proceeds of Krishi Kalyan Cess would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016.
The Krishi Kalyan Cess shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.
Service tax collection has grown by a compounded annual rate of 25 per cent over the past four years to an estimate Rs 2.1 lakh crore collected in FY16. That's higher than the tax collected from excise and customs on items like gold, cars, mobile phones, etc. The government raised the service tax from 12.3 per cent in April 2015 to 14 per cent in May 2015. It's further set to rise to 15 per cent from June onwards.
Also, the service tax base has gone up over the years as more services were included in service tax fold. Restaurants, petrol pumps and multiplexes are some of the common examples which have been included in the service tax fold over the past few years.
Finance minister Arun Jaitley had proposed the Krishi Kalyan Cess in this Budget, which is at 0.5% on all taxable services. The new effectiveservice tax could henceforth be 15%.
Jaitley, in his last Budget, had increased the Service Tax rate from 12.36% to 14%. This new rate of Service Tax at 14% was applicable from 1st June 2015. Moreover from 15th November 2015, Swachh Bharat Cess at 0.5% also got applicable. Therefore the effective rate of Service Tax is currently at 14.5% with effect from 15th Nov 2015. It seems, the rate is slowly being increased to bring service tax closer to the expected goods and services tax (GST) rate of 17-18%.
The move impacts your phone bills, dining plan, movies, healthcare, banking transactions.
The proceeds of Krishi Kalyan Cess would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016.
The Krishi Kalyan Cess shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.
Service tax collection has grown by a compounded annual rate of 25 per cent over the past four years to an estimate Rs 2.1 lakh crore collected in FY16. That's higher than the tax collected from excise and customs on items like gold, cars, mobile phones, etc. The government raised the service tax from 12.3 per cent in April 2015 to 14 per cent in May 2015. It's further set to rise to 15 per cent from June onwards.
Also, the service tax base has gone up over the years as more services were included in service tax fold. Restaurants, petrol pumps and multiplexes are some of the common examples which have been included in the service tax fold over the past few years.
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