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Here's the list of things that will get costlier from 1 June thanks to 15% service tax

Speed News Desk | Updated on: 10 February 2017, 1:50 IST

Cars, eating out and air travel are among the number of services that will become more expensive from 1 June, with the implementation of the 15% service tax as announced in the Union Budget 2016.

During the Union Budget 2016-17, Finance Minister Arun Jaitley announced a change in the tax structure that made cigarettes, cars, branded clothes (above Rs 1000) as well as rail and air travel expensive.

The service tax rate, which was hiked to 14% - with effect from 1 June 2015 - now stands at 15 % - to account for the 0.5% Krishi Kalyan Cess and the Swachh Bharat cess of 0.5%.

The Krishi Kalyan Cess will be "exclusively used for financing initiatives for improvement of agriculture and welfare of farmers," Finance Minister Arun Jaitley said in his Union Budget 2016 speech.

Here's a look at some of the things that will become more expensive from Wednesday, 1 June:

  1. Eating out at restaurants
  2. Internet and phone connections
  3. Cross-border digital transactions
  4. Train and air travel: Train tickets for air conditioner (AC) class will become costlier.
  5. Cars priced over Rs 10 lakh
  6. Couriers
  7. Tobacco products
  8. Credit card transactions
  9. Insurance premiums: The entire premium of pure insurance policies is subject to service tax.
  10. Buying houses
  11. Banking services
  12. Payment in cash for buying goods and services worth more than Rs 2 lakh with the exception of jewellery will attract 1%tax collected at source (TCS). The existing TCS of 1% on cash purchase of over Rs 5 lakh of jewellery and over Rs 2 lakh of bullion will continue, tax officials have said.
  13. Sale of options will also attract increased Securities Transaction Tax (STT) of 0.05%. Currently, STT is 0.017%.

Infrastructue Cess

The Infrastructure Cess will see prices being hiked - in the range of Rs 2,500 on entry-level small cars to over Rs 1 lakh on high-end vehicles priced above Rs 30 lakh. Infrastructure Cess will be levied by 1% on small petrol, LPG and CNG cars and 2.5% on diesel cars not exceeding 4m in length and engine capacity of up to 1500 cc. 4% cess shall be levied on all vehicles with higher engine capacity.

'Google tax'

Additionally, online advertisements will be levied with 6% tax. The equalisation levy or 'Google tax' in common parlance will apply only on payments relating to online advertisements - something the Internet and Mobile Association of India (IAMAI) has slammed, saying that levy on online advertisement revenue of foreign companies would "severely raise the cost of doing business" for Indian tech startups.

-- With PTI inputs

First published: 1 June 2016, 2:54 IST