The government has increased the service tax from 12.36% to 14% and the raise will be effective from today(01 June 2015).
The raise was proposed by Union Finance Minister Arun Jaitley in the 2015-16 budget sessions. The hike in service charge is likely to affect common people as tax is charge on below,
Ø Railways,
Ø Airlines,
Ø Banking,
Ø Insurance,
Ø Advertising,
Ø Architecture,
Ø Construction,
Ø Credit cards,
Ø Mobiles,
Ø Event management and tour operators.
In the Railways, 0.5% hike will be brought under effect from today in the AC and First Class,Second class, third class fares and freight charges.
"Currently, 3.7% service tax is charged on train fares for AC Class, First Class,Second class, third class fares and freight.
This will go up to 4.2% from today which means the rise is only 0.5%," a railway ministry official said.
The government has proposed the raise to facilitate a smooth transition to the Goods and Services Tax (GST) system.
"To facilitate a smooth transition to charge of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cesses from 12.36% to a consolidated rate of 14%," Jaitley had said in the Budget speech.
You have to spend more money for using mobiles, eating out and travelling as the service tax rate goes up to 14 per cent. Some of the key services that will become costlier are: railways, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.
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