Union budget 2015-16: 14% Service Tax can go up to 16%!

Updated on March 3, 20152 mins read

So you thought the service tax was hiked to 14%? Well, thanks to the Swachh Bharat initiative it might become as high as 16%!

Yes, you read that right. In the union budget announced on Saturday, service tax was increase from 12.36% to 14%, but what they did not mention was that a sneaky provision in the budget allows them to push it further by 2% whenever they want. Here’s what it says:

Swachh Bharat Cess:  An enabling provision is being made to empower the Central Government to impose a Swachh Bharat Cess on all or any of the taxable services at a rate of 2% of the value of such taxable services with the objective of financing and promoting Swachh Bharat initiatives. This Cess shall be levied from a date to be notified by the Central Government in this regard and will not have immediate effect.

Though this additional tax of 2% is not immediately implementable, we can expect the government to announce it soon enough.

Service tax applies on almost all the things that you use, its hardly avoidable. From banking to getting a haircut, there’s a service tax component in air tickets, restaurant bills, insurance premiums, and all the professional services you avail, and all are set to get expensive.

But even though the prices of everything in the service sector will go up, it won’t reflect in the inflation index as prices after service tax are not considered.

So what does this mean for you?

It means extra expenses, that will not be accounted for in the inflation rate, which implies that your salary hike may not take this into account at all. What’s more worrisome is that this additional cess may be imposed across the service sector, which caters to people from all sections of the society.

This also means lesser savings and calls for stringent financial planning before you spend.

So get prepared to shell out more this year, and even more when the Swachh Bharat Cess gets levied!



Tarini comes with a degree in Mass Communication and Media studies. She joined SwitchME as a content writer and moved on to being an assistant product manager. Tarini is an experienced Content Strategist with a background in Product development and management. She is skilled in SEO, social media strategy and online content marketing and likes to travel when possible

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