New service tax rate of 14 pc to come into effect from June 1

The new service tax rate of 14 per cent will come into effect from June 1, government today said, in a move that will make eating out in restaurants, insurance and phone bills expensive, among many other things.

The service tax is currently levied at the rate 12.36 per cent including education cess.

Top official sources said that the new rate of 14 per cent announced by Finance Minister Arun Jaitley in his Budget for 2015-16 would come into effect from June 1.

In his Budget speech, Jaitley had said that to facilitate a smooth transition to levy of tax on services by both the Centre and the States, "it is proposed to increase the present rate" of service tax plus education cess from 12.36 per cent to a consolidated rate of 14 per cent.
Service tax is levied on all services, expect a small negative list.

Advertising, air travel, services of architect, certain type of constructions, credit card, even management, and tour operator are some of the important services which attract tax.