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When will new service tax rate 14% be applicable

After budget 2015 , the common question asked to me by various blog readers, when will new service tax rate 14% be applicable? That’s why I have written this post.The new rate will be applicable from 1st June, 2015.

Applicability of new service tax rate 14% after budget 2015:

I can understand worry of service tax payers about new service tax rate. Let me clear that new service tax rate will not be applicable from 1st April, 2015.

When we read the amendment of section 66B, it reads as under,

[su_quote]106. In section 66B of the 1994 Act, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, for the words “twelve per cent.”, the words “fourteen percent.” shall be substituted. [/su_quote]

To bring more clarity, CBEC issued instruction under F.No. 334/5/2015 – read here.

[su_quote]3.3 The new Service Tax rate shall come into effect from a date to be notified by the Central Government after the enactment of the Finance Bill, 2015. 3.4 Till the time the revised rate comes into effect, the ‘Education Cess’ and ‘Secondary and Higher Education Cess’ will continue to be levied in Service Tax. [/su_quote]

So the new service tax rate 14% shall be applicable from the date notified by Central Government, by way of notification in official gadget,  after enactment of finance bill, 2015.

It is not notified yet.

12.36% shall be continue:

Until new service tax rate 14% shall not be notified, service tax rate 12.36% shall be continue as service tax rate.

Institute of Chartered Accountants of India has also issued clarification regarding it. Read it here

Swachh Bharat cess on service tax:

Central government can levy Swachh Bharat Cess on any or all services. The date shall be notified by central government regarding to it. Until that, no need to worry about it and confuse yourself.

How to calculate abatement / exemptions?

Calculate taking 12.36% as base rate. Consider changes applicable from 1/4/15 in abatements. There are few changes in abatement rate. The changes are in abatement rate for manpower service and security service and transportation business. Abatement rate for other services are the same as before budget 2015. So the service tax rate for other services are same as before budget.Once the new service tax rate 14% is notified, new article regarding new rate ( with and without abatement ) shall be published by us.

UPDATE- 19/5/15- SERVICE TAX RATE APPLICABILITY:

New rate applicability of service tax 14%: WILL BE APPLICABLE FROM June 1, 2015. The honorable president gave assent to bill 2015 on 14,2015. But the date is notified on 19/5/2015 via notification 14-2015-ST.New rate of service tax will become applicable and education cess shall be abolished. Charge service tax at 12.26% till May 31, 2015.

Read notification here.

Swachh Bharat cess provision:

The swachh Bharat cess shall be levied on all or any services. The effective date of charging swachh Bharat cess will be notified later. We will update article when there is new notification.

If you are availing benefits of abatement, continue it with changes made in abatement rate in financial bill, 2015. You can read about service tax rate and changes in service tax in budget through following links.

 

For current rate – read our article current service tax rate chart ( Updated with budget 2015 changes.)

Service tax changes effective from 1st Arpil, 2015:

  1. Introduction of new exemption.
  2. Withdrawal of exemption available.
  3. Changes in rate of reverse charge mechanism.
  4. Changes in abatement rate.
  5. Changes in cenvat credit definition.

You can get detailed guidelines of above from our post.

service tax rate chart 2015-16

Union budget 2015-16 highlights

If you have still query regarding new service tax rate 14%, please ask below through comments.If this post is helpful to you, say thanks by sharing it to social media via buttons on left side.

 

 

 

67 Comments

  1. By Harshal Choudhary

    Good subject to Read and know about Service Tax Rate. Can the Notification to be issued by the Government be of retrospective effect. if so, how to get the differential service tax if we bill it at12.36%.

    • By admin

      No, new service tax rate will not be effective retrospectively. The Central Government will issue the date to charge and pay service tax at 14%. From that date, you are required to charge service tax at 14%.

  2. By Ritesh Kumar

    which date service tax rate 14% applicable

  3. By Satish Redkar

    Please clarify from which date we have to charge service tax @14%

    • By admin

      The rate will be applied when the date will be notified by government. Till that , charge 12.36% .

  4. By Basuki

    New abatement rate & receivable of s.tax.

  5. By karthik

    Mam what about the SBC of 2%

    • By admin

      Swachh bharat cess will be applicable to some or all services. That will be notified by central government through notification. Till that no SBC of 2%.

  6. Is Service Tax @ 14% applicable from 1st May 2015?

  7. By Grishma

    Once budget will notify by government than please let me know, i want to know when new service tax will be applicable.

  8. By padmalochan pani

    In previous the service tax rate was 12,then 2, then,1 and total 12.36% but now it willbe 14% .I want to know has 2 % and 1% now been ignored.

    • By admin

      The rate is not implemented yet. THe education cess will be abolished in new rate and new rate will be 14%. Addionally swachh bharat cess will be levied on some or all service. Yet not notified.

    • By admin

      Yes, ignore 3% cess while applying new rate 14%. Charge directly 14%. No education cess will be levied.

  9. I want to know the abatement rate in service tax — provide service in diesel filling in tower sector for running tower when there is no electricity

    • By admin

      Please clarify your service category. Are you selling diesel or providing any other additional service?

      • By Srinivas

        I want to file nil income taax return for FY 12-13, 11-13.Is there any chance tile for those years

      • By admin

        You cannot file because the last date for filling tax return for 2012-13 is 31st March, 2015.

      • By admin

        No, you can’t file.

  10. By K.DEVARAJAN

    In the post-budget session completion there is no service tax changes effect till 13.05.2015 by the union govt. how to charge the S.Tax(rate of Tax) as a service Provider in respect of Manpower & goods transport by road etc in the reverse machanisam.

  11. By pavan

    new service tax has introduced as per the bill passed by the president on 14.05.2015

    • By admin

      But it will be effective from the date notified by central government.

  12. By m.n.madhusudana

    when will effect
    service tax @14%

    • By admin

      Date will be notified. May be in July. Charge 12.36% up to the date of notification.

  13. By kallol bose

    When new service rate is applicable

  14. By siddhesh

    what rate of service tax is applicable on insurance premium in first year and subsequent year from 1st june 2015 ?

    • By admin

      Service tax on insurance premium on first year is 3.5% on gross amount charge.

      Service tax rate on insurance premium on subsequent years is 1.75% on gross amount charge.

      Rates are as per composition scheme.

      • By siddhesh

        Thanks for your valuable reply. i want to know that……..is new service tax really going to applicable from 1st june 2015 ?

  15. By Ashish Mishra

    Is new rate 14% is including all type of cess which ever is applicable

    • By admin

      Yes, no requirement to add additional cess on service tax rate 14%.

  16. By avasesh kumbhar

    will it be retrospective ??

    • By admin

      No, it is not retrospective.The rate is applicable from 1st june, 2015. However, you need to read POT rules. Soon publishing article on it.

  17. MAM PLZ TOLD ME THAT , IS THE ANY CESS APPLICABLE ON SERVICE TAX. I READ IN NEWS PAPER THAT SAME AS GREEN CLEAN CESS APPLICABLED ON SERVICE TAX AMOUNT 2%.

    • By admin

      Swachh Bharat Cess will be applicable on any or all services. It is not notified yet. Till that date, charge 14%.

      • Could you give me an example, with Old & New tax rates, for a bill of 5k in a Restaurant, for comparison ? Thanks !

      • By admin

        Suppose restaurant bill is Rs. 5000 without vat.

        service tax will be 5000*14%*40% = Rs.280

        Vat will be 5% ( VAT rate in gujarat) = 5000*5%= 250

        Total bill = 5000+280+250=Rs. 5530

      • By Dathu

        can you say entry for service tax for 14%

      • By admin

        Customer a/c Dr

        TO income a/c

        To service tax payable.

  18. By K.Ganesan, Tax Consultant

    mam, what is the service tax rate for hospitals

  19. By Srinath

    Thanks for the above wonderful post, Have a query on RCM applicable rate.
    Can you pls clarify the applicable rate for the below situation –
    manpower Service provided in the month of April, Invoice raised in the month of May, ST Remittance is being done in June
    What rate is applicable – 12.36% or 14% ?

  20. By unnikrishnan

    What about services availed in May(1-31) and invoice generated in June 2015 ? Which tax rate will be applied?. Eg. Postpaid bills

  21. By siddhesh

    what is rate of service tax on life insurance premium in first year and subsequent year from 1st june 2015. is service tax really increase on lic premium from 1st june 2015.

  22. By Rajnish Kumar

    plz confirm new servicetaxrate is14% + Eductation cess ( 2% on service tax value) + Secondry education cess ( 1% on service tax) is it ok or anything

    • By admin

      Service tax rate ( Effective) is 14%. No need to add education cess.

  23. By Rajagopal K

    Pl.clarify whether the rent payable for May 2015 will attract service tax @ 14% or 12.36% as the new rate of
    service tax is applicable from 1st June 2015

  24. By Shaji

    what will be the service tax for service rendered in April 2015 and invoiced in June 2015

  25. MAM, PLZ TOLD ME THAT WILL BE CANCELED THE SERVICE TAX COMING THE GST (GOODS SERVICE TAX). AND COMING THE GST WILL BE WHOSE TAX IN EFFECT. PLEASE CLARIFY THIS PROBLEMS.

  26. By k.devarajan

    Central Excise registration- for MSME Units- Turnover Limit for registration for the 2015-16 F.Y (2016-17 A.Y) pls. explain & give details

  27. By Ganesh

    Dear Madam,

    We received TCS 1% on scrap for the month of April 15 Rs. 290, June 15 Rs. 57 and on oct 15 Rs. 47.
    But till now we didn’t paid the tax and not file the return also.
    Kindly let me know the interest and penalty rate for the above TCS, if i file on feb 2016

  28. By kuldeep

    hello mam i want to know service tax applicability on real estate

  29. By k.devarajan

    DRAFT GST IN INDIA WILL BENEFICIARY TO COMMON MAN OR BURDEN?

  30. By k.devarajan

    SPECULATIONS ON GST NOT SO CLEAR & IMPLICATIONS-COMMENT.

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