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Service Tax 15% from June adding Krishi Kalyan Cess 0.5%

From June 1, Krishi Kalyan Cess will be levied at 0.5% on the value of all taxable services, taking the service tax rate of 14.5 percent to 15%.

The new cess was announced by Finance Minister Arun Jaitley in Budget 2016. The purpose of levying the cess is to finance and promote initiatives to improve the condition of the agriculture sector.

“The levy of Krishi Kalyan Cess will add extra burden on the pockets of service recipient. The levy has already been raised from 12.36% to 15% within a span of one year only and will contribute to inflationary pressures,” said Amit Maheshwari, Partner, Ashok Maheshwary & Associates.

Your cost of living is set to get slightly costlier from June 1. Mobile bills, eating out in restaurants, internet, movies, spa, saloon, gymming, banking transactions, travelling and many more services will become expensive with the new Krishi Kalyan Cess (KKC) of 0.5%.

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A Cess is a Tax that is collected by the government to be used for a specific purpose. The collections from levy of cess can be used only for the purpose for which it has been collected and not for any other purpose.

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