Eating out, mobile phone usage and air and rail travel will become expensive with the new Krishi Kalyan Cess (KKC) of 0.5 percent on taxable services coming into force from 1 June.
With the imposition of Krishi Kalyan Cess, the total incidence of Service Tax will go up to 15 percent.
KCC to be levied on all taxable services is aimed at financing and promoting initiatives to improve agriculture.
The Central Board of Excise and Customs (CBEC) has notified that the Cess will come into force on 1 June.
Last year, the government had imposed Swachh Bharat Cess of 0.5 percent on Service Tax.
HDFC Bank through SMS has already informed its cardholders about increased rate of Service Tax from 1 June.
Prashant Deshpande, Senior Director, Deloitte in India said the input credit of KKC is not permitted to be used other than for payment output of KKC on taxable services.
Maheshwari further said as per the amendments pertaining to Point of Taxation, this has been clarified that in cases where invoice had been issued prior to levy of this cess and payment is receivable either in full or part thereof as on date of levy then this cess will be leviable from the date of levy (1 June, 2016).