Get Ready to Pay More From June 1, Good and Services to be costly

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New Delhi: Get ready to pay more for various services from June 1. The hike in service tax will have a sweeping effect on a slew of goods and services. Service tax has been increased from 12.36 per cent to 14 per cent and the hike will be applicable from June 1.

The notification comes after the passage of the Finance Bill earlier this month.

The hike in the service tax was part of proposals in Budget 2015-16. The proposal was made by the government to facilitate the roll out of national goods and services tax, expected to be imposed from April 2016.

The rate of tax from June 1, 2015, will be 14 per cent, including the education cess. At present, the rate of service tax is 12.36 per cent, including the cess.

Eating out in the restaurants, hotel stay, mobile bills, vehicles, consumable goods, travel by air, marriage venues, cable service salon and beauty parlour visits and other leisure activities will now cost more. Service tax will be levied on all services rendered, except those on a small negative list.

The increase in service tax is expected to hit tourism, information technology, pharma, logistics, realty and the auto sector. The increase has evoked a sharp reaction from the city people.
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The hike in the service tax is expected to directly impact the real estate industry and has miffed local players who are already reeling under the slowdown in the demand for homes. “The service tax hike will not only increase the cost of construction and raw materials but also prompt prospective buyers to delay their decision to purchase their dream homes,” said Joginder Singh, a real estate consultant.

The hospitality sector will also feel the pinch. Customers will now have to pay 22 per cent of the bill amount as tax after the service tax increase comes into effect on June 1.

Youngsters are particularly upset as it will also lead to a hike in the cost of telephone and Internet services. Besides, eating out and going to a movie will now cost more.Gyms, health clubs, salons and beauty parlours will also be compelled to hike their fees.

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