New Delhi, November 15

Eating out, telephony and travel will become expensive from Sunday, with the government imposing 0.5 per cent Swachh Bharat cess on taxable services which 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 Barat 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.
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 air–conditioning facility, the cess would be 0.5 per cent of 40 per cent of the billed amount, i.e., 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.
Travel in Railways’ upper class categories has also become costlier as a service tax levy of 14 per cent and a Swachh Bharat cess of 0.5 per cent became effective from today.

According to a rail ministry circular, the levies make for a 4.35 per cent hike for travel in First Class and all AC Classes from November 15.

The decision to increase passenger fares is in line with a government notification on November 6 for imposing a Swachh Bharat cess on all taxable services.

“Service tax of 14 per cent and Swachh Bharat cess of 0.5 per cent are chargeable on 30 per cent of total passenger fare equivalent to 4.35 per cent of the total fare on first class and all AC fares,” the circular said.

However, the service tax will not be applicable for tickets issued before November 15. Neither would the levy be applicable for general and sleeper-class travel.

With the hike, AC-I fares on mail and express trains from New Delhi to Mumbai are up by Rs 206 while the rise is of Rs 102 for AC-III fares from New Delhi to Howrah.

On the Delhi-Chennai route, the increased fare works out to about Rs 140 for the AC-II segment.

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. — PTI