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

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