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Pay more at restaurants from June 1. Thanks to Service Tax hike.

Come June 1, and you will be required to pay more for most of the things. Restaurant Bills, Mobile Bills, Insurance Bills, Air Tickets are all set to shoot up as the service tax imposed by Central government gets increased to 14% from June 1. The government has proposed to increase the existing rate of Service tax from 12.36% to 14% from June 1.

Hotels to Charge More as Service Tax gets increased

Hotels to Charge More as Service Tax gets increased


What will be costlier ?

All the places where “services” are being provided get hit by this increase. A quick run through of items that get costlier from June 1 are as follows:

  • Eating out at Restaurant
  • Staying in the Hotel Lodge
  • Air Travel Tickets
  • Mobile Bills
  • Insurance Bills
  • A/C Train travel tickets
  • Beauty Parlour Bills
  • Rates of Marriage Venues
  • Consumable Goods

Although the above list is not exhaustive, it gives you a fair idea on all the items over which you will be required to shell out more.


Railways announces Fare increase

AC Train Fares Hiked

AC Train Fares Hiked

Indian Railways has already announced an increase in its AC class fares, besides the goods services – owing to the increase in the Service Tax percentage. The fares of the AC class and the First class travel will be increased by 0.5% from June 1. However the Sleeper class and General class fares are not affected with this hike.


Why the increase ?

The Union Finance Minister Arun Jaitley, in his budget had proposed to increase the Service Tax to 14% from its existing 12.36%. However it is coming into effect from 1st of this June. Earlier the Service Tax was comprising of 12% basic tax and 0.36% Education Cess. It is now recommended to get consolidated and increased to 14%.


More to come ?

The Government also proposes to include a Swacch Bharat Cess on some items. However this imposition has been delayed for now, but the govt. plans to do it in the near future. With this, some of the items such as luxury restaurants, hotels, air travel and insurance are expected to go up again.



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