From 1st June 2016, 15% Service Tax Will Be Charged [ Current Affairs ]


15 % service tax will be charge from the 1st June 2016 on the most of services such as eating, Uber ride. 0.5 % will be added in to the total bill with the new Krishi Kalyan Cess. This cess will be charged addition to the usual service tax rate of 14.5%.

  • Earlier in November 201, 0.5 % Swachh Bharat Cess was introduces and then in this year’s Budget the Union Finance Minister has announced a Krishi Kalyan Cess of 0.5 % to finance agriculture and build a fund for the welfare of the farmer’s related activities.
  • For example: if total food bill is Rs. 1, 500 than

10 % service charge will be included so (1, 500 + 150 = 1, 650)

Service tax on 40 % of amount (14 % of 600 = 84)

Swatchh Bharat Cess 0.5%= 3

Krishi Kalyan Cess 0.5%= 3

Value added tax 12.5 % on subtotal (1650) = 206.25

So total payable amount will be Rs. 1946.25

What is Swachh Bharat Cess?

  • The share of Swachh Bharat Cess taxes is offered to fund activities related to Prime Minister Narendra Modi’s flagship cleanliness drive.
  • Under this cess Rs. 1, 917 crore has collected till February 2016 by central government.
  • It is a cess so that controlled by the central government and the money raised through this cess is deposited into the Consolidated Fund of India that means that the central government will decide on how it is to be spent

About Krishi Kalyan Cess

  • The Krishi Kalyan is also Cess so fund collected from this cess will be deposited into a separate fund as the Finance Minister Arun Jaitley said in his budget speech, and it will be used in agriculture-related activites.
  • The effect of the Krishi Kalyan Cess will be slightly lower on manufacturers because in the Swachh Bharat Cess, they will get a discount for cess paid on input goods at every step of the manufacturing process.
Service tax rate ratio

Service tax rate ratio

Service tax rate ratio from 1994

Other Cess:

  • Apart from these ceases the government also has proposed a new Infrastructure Cess on vehicles due to rising problem of pollution in Indian cities.
  • This cess will charge up to 1%-4 % according to the size and kind of vehicle purchased.

- Published on: June 1, 2016