Imposing another TAX (krishi Kalyan Cess)
Service Tax = S.T (14%) + S.B (swatch bharat cess 0.5%) + KKC (0.5%) = 15 %
The proceeds of Krishi Kalyan Cess would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016. Budget 2016 as proposed to impose a Cess, called the Krishi Kalyan Cess, @ 0.5% on all taxable services. The new effective service tax could henceforth be 15%. While presenting the Budget 2015, the FM had increased the Service Tax Rate from 12.36% to 14%. This new rate of Service Tax @ 14% was applicable from 1st June 2015. Moreover from 15th Nov 2015, Swachh Bharat Cess @ 0.5% also got applicable. Therefore the effective rate of Service Tax is currently at 14.5% with effect from 15th Nov 2015. It seems, the rate is slowly being increased to bring service tax closer to the expected goods and services tax (GST) rate of 17-18%.
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