Swachh cess: Eating out, telephony gets costlier too

Eating out, telephony and travel will become expensive from on 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.