On Tuesday the government has announced that the new service tax rate of 14 percent will come into force from June 1, this will cause eating out in restaurants, insurance and phone bills to be expensive among many other things.

Including education cess, the current service tax is levied at the rate of 12.36 percent.

In the Budget speech, the Finance Minister Arun Jaitley said that, to facilitate a smooth transition to levy of tax on services by both the Centre and the States, “it is proposed to increase the present rate” of service tax plus education cess from 12.36 per cent to a consolidated rate of 14 per cent.

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