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Service tax 14.28% or 16%?

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Akshay Gandhi

Student CA IPC / IPCC

21 Points Posted on 10 March 2015

Hey everyone,

As per clause 117 of finance bill 2015. 2% Clean india cess on value of services shall be applicable other than service tax i.e. 14%.

But according to the definitions CESS is a term which is fixed percentage applicable on tha tax amount. so what will be the effective rate of tax:

1. 14.28% i.e. 14 of service tax plus 2% of 14% that is 0.28%

2. 16 % i.e. 14(service tax) + 2(Clean india Cess)??????

Replies (1)

Deepak Gupta

CA Student

8353 Points Posted on 10 March 2015

14% + 2% = 16%
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Relevant extracts from Memorandum to Finance Bill 2015,
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“An enabling provision is being made to empower the Central Government to impose a Swachh Bharat Cess on all or any of the taxable services at a rate of 2% of the value of such taxable services with the objective of financing and promoting Swachh Bharat initiatives.
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This Cess shall be levied from a date to be notified by the Central Government in this regard and will not have immediate effect.”