Eating out, telephony and travel has become expensive with the Government imposing 0.5 per cent Swachh Bharat cess on taxable services. The new levy, which takes effect today, is expected to yield about Rs 3,800 crore to the exchequer in the remaining months of the fiscal.
With the imposition of the cess, service tax rate will go up from 14 per cent to 14.5 per cent on all taxable services.
According to Revenue Secretary Hasmukh Adhia, the Government expects to collect around Rs 10,000 crore from Swachh Bharat cess for full year.
So in the remaining months of this fiscal till March 31, 2016, the cess would yield about Rs 3,800 crore to the kitty.
The Swachh Bharat cess would be levied only on the portion of taxable services (after abatement) and will go towards funding of the cleanliness drive, a pet project of Prime Minister Narendra Modi.
Restaurant bills
This means that service tax on restaurant bills will go up from 5.6 per cent to 5.8 per cent following the levy of 0.5 per cent Swachh Bharat cess.
The Finance Ministry has also clarified that the Swachh Bharat cess will not apply on those services for which payments have been received prior to November 15 and invoices raised before November 29.
The decision to impose 0.5 per cent cess will translate into a tax of 50 paise only on every Rs 100 worth of taxable services.
Explaining the provisions for the levy of cess, the Ministry said it would be calculated on the abated value or value arrived as per the Service Tax (Determination of Value) Rules, 2006.
For restaurants or eating joints having airconditioning facility, the cess would be 0.5 per cent of 40 per cent of the billed amount, that is, 0.2 per cent. “The cumulative service tax and Swachh Bharat Cess liability would be 5.8 per cent (14.5 per cent of 40 per cent) of the total amount charged,” it said.
PAN card cost goes up
Getting a new Permanent Account Number (PAN) card for income tax purposes has become costlier by a rupee to Rs 107.
Under revised charges, a PAN card, issued by the Income Tax department to an individual or entity to keep a track on all their financial activities, within the country will now be costing Rs 107 instead of Rs 106.
Similarly, getting a new PAN shipped outside India will cost an individual or entity a total of Rs 989, Rs 4 more than the existing price of Rs 985.
The PAN charges were revised by Rs 1 earlier this year in June when service tax charges were enhanced by the Government.
Under the new rates for a PAN card to be obtained in India, government will charge Rs 93 as the processing fee and the new service tax levied on it will be Rs 14 which makes the new cost of Rs 107.
In case of the PAN card to be sent abroad, the government will charge Rs 93 as processing fee, Rs 125 as service tax and Rs 771 as the courier charges, bringing the overall cost at Re 989.
Not another tax
Finance Minister Arun Jaitley had in Budget 2015—16 proposed to levy a Swachh Bharat cess of up to 2 per cent “on all or certain services, if need arises”.
“Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives,” the Finance Ministry had said while notifying the Swachh Bharat cess.
The government had in Budget 2015-16 estimated to collect over Rs 2.09 lakh crore from service tax. The Rs 3,800 crore collection from the cess would be over and above that.