Get ready to pay more for phone bills, dining out and using internet as Krishi Kalyan Cess kicks in from June 1st

Indians would have to shell out more money for eating out, internet transactions, and travel since government’s new Krishi Kalyan Cess is all set to kick in from Wednesday onwards.

The new cess was proposed by Finance minister Arun Jaitley in Budget 2016, and would be levied at 0.5% on all taxable services, making the new effective service tax to be 15%.

It was only in the last budget that the service tax rate was increased from 12.36% to 14%, which was applicable from 1st June 2015. To add to the payers’ woes, Swachh Bharat Cess was made applicable at 0.5% from 15th November 2015, thus raising the effective service tax rate to 14.5%.

And now, the Krishi Kalyan Cess has further increased it to 15%, making it look like that the service tax is now closer to the expected goods and services tax (GST) rate of 17-18%.

The tax would be levied on phone bills, dining plans, cinema halls experiences, healthcare, and banking transactions.

The proceeds from this cess are said to be kept exclusive for financing initiatives relating to improvement of agriculture and welfare of Indian farmers, under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.

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