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Change in Service Tax and Swach Bharat Cess

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The Service Tax Rate is being increased from 12.36%(including cess) to 14.00% .The new rate is 14.00 % flat. No Education Cess and Secondary  Cess will charge on it.The new service tax rate shall come into effect from a date to be notified by the central government after the enactment of the Finance Bill, 2015.
In contrast with above the new rate of Service Tax rate 14 % will be applicable from 1st June15. Notification no. 14/2015.
Presently no change on account of swach bharat cess.
SWACH BHARAT CESS

Clause 117 of the Finance Bill,2015 seeks to insert a new Chapter VI so as to levy a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services for the purposes of the Union for financing and promoting Swachh Bharat initiatives and any other purpose relating thereto.An enabling provision is being made to empower the Central Government to impose a Swach Bharat Cess on all or any of the taxable service at the rate of 2% of the value of such taxable services with the objective  of financing and promoting Swachh Bharat Initiatives.The provisions of Chapter V of the finance Act, 1994 and rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be,  apply in relation to the levy and collection of Swach Bharat Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the finance act,  1994 or the rules made thereunder, as the case may be.Swach Bharat Cess shall be levied from a date to be notified by the Central Government in this regard and will not have immediate effect.
IMPACT

The changes in rate will increase the cost of services. Services like telephone, cab, consultancy, beauty parlor, security services and lots more will become costlier after the new rate.For example suppose your telephone bill inclusive service tax was Rs. 112.36 before new rate will now increase to Rs. 116.Means there is an extra burden of Rs. 3.64 on each 100 rs services.

Effective Service Tax Rates for various services W.e.f. 01.06.2015

Normal – 14 %
GTA Transports – 4.2 %
Builder-Residentail – 3.5 %
Builder-Commercial – 4.2 %
Civil Contractor with Material – 5.6%
Erection/ elctr wth Material – 5.6%
Repair Maint. of Bldg or goods – 9.8 %
Lodging – 8.4 %
Restaurant – 5.6 %
Catring – 8.4 %
Hall wth Catering – 9.8 %
Vehicle Rent – 5.6%

The rate is considered after taking rebate impact

NOTIFICATION 14/2015 ST:-
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) NOTIFICATION
New Delhi, the 19th May, 2015 No. 14/2015-Service Tax G.S.R. —(E).- In exercise of the powers conferred by clauses (a), (c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109, section 153 and section 159 of the Finance Act, 2015 (No. 20 of 2015), the Central Government hereby appoints the 1st day of June, 2015 as the date on which the provisions of clauses (a), (c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109, section 153 and section 159 of the said Act shall come into force.
[F.No. 334/5/2015 – TRU]
(Akshay Joshi) Under Secretary to the Government of India
-CA MANISH MALHOTRA
+91-9717560005

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