After notifying the date for increased service tax rates, the finance ministry is now preparing for an additional two per cent Swachh Bharat cess to be levied on services. But it is not yet not decided whether such a cess will be levied on all services or only a select group of services.
The Swachh Bharat cess was announced in Budget 2015-16. The government came in for a severe criticism after announcing such a measure that will increase the effective rate of services to 16 per cent. “The date of giving effect to the provisions relating to imposition of a Swachh Bharat cess on all or any taxable service will be done in due course,” the ministry said in a statement.
If the government decides to levy the cess on all services, it will increase the rates across the board on all services including travel, phone bills, dining out, insurance, and management. Explaining the logic behind increasing the service tax, Revenue Secretary Shaktikanta Das had said there was a need to streamline the rate of levy with the rates to be imposed at the time of introduction of GST.
The government proposes to introduce the new indirect tax regime GST from April 2016.
Das had said that there was a need to “monetise” services which contributed 60 per cent to the GDP, and 40 per cent to the indirect tax collection.
The government had on Tuesday notified June 1 as the date from which the increased service tax rate of 14 per cent will be applicable.
SWACHH COLOURS
If the government decides to levy the cess on all services, it will increase the rates across the board
The government wants to streamline the rate of levy with the rates to be imposed through the GST
It has already notified June 1 as the date from which the increased service tax rate of 14% will kick in
Swachh Bharat cess will increase the effective rate of applicable services to 16 per cent.
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