CA Bimal Jain

CA Bimal JainThe Union Budget, 2015 has proposed an increase in the rate of Service tax from 12.36% to flat 14% with abolishment of Education cess and Secondary & Higher Secondary Education cess. Further pursuing with Mr. Narendra Modi’s Dream of Swachh Bharat, a new Chapter VI has been inserted in the Finance Bill, 2015 that contains a new levy of cess called the ‘Swachh Bharat Cess’ which may be levied on all or any of the taxable services at the rate of 2% on the value of such services. With Swachh Bharat Cess, Service tax rate may increase from present 12.36% to 16%.

The CBEC vide Circular No. 183/02/2015-ST dated April 10, 2015, has clarified that the new rate of Service tax i.e. 14% shall come into effect from the date to be notified by the Central Government after the enactment of the Finance Bill, 2015.

It is further clarified that till the revised rate comes into effect, the ‘Education Cess’ and ‘Secondary and Higher Education Cess’ will continue to be levied on Service tax.

The Central Government has further elucidated that valuation of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess shall be determined as provided in Rule 2C of the Service Tax Valuation Rules. In the Union Budget, 2015, no change has been made in these Rules; therefore, any confusion is unwarranted. Further, the rate of Service tax on the specified portion of the amount charged for such supply which is 40% continues to be the same i.e. 4.944% till a date notified in due course.

Our Comments: We have also intimated the same to our esteemed readers on April 1, 2015 on similar footing as clarified by CBEC, considering the debate taking place in the Trade with the advent of New Financial Year 2015-16, discussing a common question as to whether the increased Service tax rate is applicable from April 1, 2015. Thereafter a similar clarification was issued from the Commissioner of Service Tax, Nagpur that the new rate is applicable from a date to be notified. Now, the CBEC has also clarified the same.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email:

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  1. jugal kishore says:

    Dear Bimal sir, i am a student of ICAI , kindly confirm me that the swach bharat cess will be leviable on service value or on service tax since it represents the “cess” and i hope there is clear understanding mentioned on the busget speech word file that is cess will be leviable on service tax component the grossed up tax rate will be 14.28%(14%+2%).

  2. visuiyer says:


    Modi Govt is confusing..
    not simplyfying..

    It is not good for the good governance
    to announce one and implement later..

    We need a professional lealders.. to guide the people and lead India..

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