From today, get ready to pay higher bills for eating out, mobile calls, travel, movies, among others, as the higher service tax rate of 14 per cent comes into effect.

Following Finance Minister Arun Jaitley’s Budget announcement and enactment of the Finance Bill, the service tax rate has been hiked from 12.36 per cent to 14 per cent (inclusive of education cess) on all services, except a listed few.

However, there is no change in the rate of abatement, which means a specified portion of value for taxation remains the same, but the effective tax rate goes up due to the increase in base rate. Almost 60 per cent services do not attract 100 per cent service tax.

A Finance Ministry circular said from Monday, service tax will be levied on entry to amusement parks, entertainment events, such as concerts, pageants, musical performances, award functions and sporting events, other than recognised ones, if the ticket costs over ₹500.

However, it has been clarified that events, such as circus, recognised sporting events, dance, theatrical performances, such as drama and ballets, will continue to get exemption.

Swachh Bharat cess The Ministry said no date has been finalised for imposition of the 2 per cent Swachh Bharat Cess on taxable services, as proposed in the Budget, over and above the 14 per cent service tax rate. The Centre aims to collect around ₹2.10 lakh crore through service tax, about 32 per cent of the total indirect tax target, which is 24.7 per cent higher than the revised estimate of 2014-15.

Keeping this in mind, the tax authorities have decided to collect the hiked service tax from June 1, instead of July 1 in previous years.

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