New Delhi: From Wednesday, eating out, internet and travel becomes costly with the new Krishi Kalyan Cess kicking in. The move impacts your phone bills, dining plan, movies, healthcare, banking transactions. Finance minister Arun Jaitley had proposed the Krishi Kalyan Cess in this Budget, which is at 0.5% on all taxable services. The new effective service tax could henceforth be 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. Service tax collection has grown by a compounded annual rate of 25 per cent over the past four years to an estimate Rs 2.1 lakh crore collected in FY16. That’s higher than the tax collected from excise and customs on items like gold, cars, mobile phones, etc. The government raised the service tax from 12.3 per cent in April 2015 to 14 per cent in May 2015. It’s further set to rise to 15 per cent from June onwards.