With the imposition of the cess, the service tax rate will go up from 14 percent to 14.5 percent on all taxable services. It is expected to fetch the exchequer about Rs.3,800 crore in the remaining months of the fiscal.
It will translate into a tax of 50 paise on every Rs.100 worth of taxable services.
Service tax on restaurant bills will go up from 5.6 percent to 5.8 percent following the levy of 0.5 percent Swachh Bharat, or Clean India, cess.
The finance ministry has clarified that for restaurants or eating joints having air-conditioning facility, the cess would be 0.5 percent of 40 percent of the billed amount, that is 0.2 percent.
“The cumulative service tax and Swachh Bharat Cess liability would be 5.8 percent (14.5 percent of 40 percent) of the total amount charged,” it said.
On Thursday, the ministry, however, clarified that the cess will not apply on those services for which payments have been received prior to November 15 and invoices raised before November 29.
It would mean that the Railway and flight tickets booked before November 15 will not attract the additional levy.
The Swachh Bharat cess, the statement said, will be levied only on the portion of taxable services (after abatement) and will go towards funding of the government’s cleanliness drive. (IANS)