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Service tax hiked to 14% from 12.36%, mobile and restaurant bills to cost more

certain pre-cold storage services in relation to fruits and vegetables have been exempted from the service tax.

Written by Vaidyanathan Iyer | New Delhi |
February 28, 2015 1:52:53 pm

In what will increase the restaurant and mobile bills among others for the common man, the government today increased the service tax to 14 per cent from the current 12.36 per cent.

“To facilitate a smooth transition to levy of tax on services by both the centre and the states… the service tax rate is being increased from 12 per cent plus education cesses to 14 per cent. The education cess and secondary and higher education cess shall be subsumed in the new service tax rate. The revised rate shall come into effect from a date to be notified,” finance minister Arun Jaitley said while presenting the Budget 2015-16.

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Also, the negative list of services has also been pruned by bringing more services under tax net. This will pave way for levying service tax on services being provided by amusement facility such as rides, bowling alleys, amusement arcades, water parks; services provided for admission to entertainment event of concerts, non-recognized sporting events, pageants, music concerts and award functions, if the amount charged for admission is more than Rs 500; service for carrying out any processes as job work for production or manufacture of alcoholic liquor; all service provided by the government to business entities; exemption to transportation of food stuff by rail, or vessels or road will be limited to transportation of food grains including rice and pulses, flours, milk and salt only, among others.

However, certain pre-cold storage services in relation to fruits and vegetables have been exempted from the service tax in a bid to incentivise value addition in the sector. Also, the Varishta Bima Yojana for senior citizens has also been exempt from the service tax net. The common affluent treatment plants will also not attract service tax, Jaitley said.

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