New Delhi: Talking on mobile, eating out and travelling will become costlier from Monday as Finance Minister Arun Jaitley’s proposal to increase service tax upto 14 per cent from the older rate of 12.36 per cent takes effect from June 1.
The tax is levied on all services, expect a small negative list.
Some of the key services that will attract higher tax and hence become costlier are: railways, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.
Mobile operators and credit card companies have already started sending messages to subscribers conveying the increase in service tax rate which will have a bearing on the bills.
According to railway ministry officials, fares for First Class and AC classes in passenger trains, besides freight charges, will go up by 0.5 per cent from June 1.
“Currently, 3.7 per cent service tax is levied on train fares for AC Class, First Class and freight. This will go up to 4.2 per cent from June which means the rise is only 0.5 per cent,” the official said. Currently, there is abatement of 70 per cent on passenger services.
Jaitley had proposed to raise the service tax rate to 14 per cent to facilitate a smooth transition to the Goods and Services Tax (GST) regime, which the government wants to roll out from April 2016.
Once implemented, GST will subsume service tax, excise and other local levies.