The existing Service Tax rate of 12.36% increased to flat 14%

As we all know from 1^st Jan 2014 onward it was mandatory for all the service tax payers who who has paid a duty or tax of more than Rs 1 lakh in the previous financial year was required to pay duty or tax through Internet banking.

In the budget speech, Hon finance minster Shree Jaitley had 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% to a consolidated rate of 14%.

The Finance Ministry has now announced the increased Service Tax rate of 14% to be effective from 1st June 2015 vide Notification No. 14/2015 dated 19th May, 2015. The existing Service Tax rate of 12.36% was increased to flat 14% in the Finance Bill 2015.

The provisions levying Education Cess @ 2% and Secondary Higher Education Cess @ 1% would also cease to effect from 1st June, 2015.

It is quite obvious that the all the rates of service related items will increase from 1st June 2015.  Talking about the IT related services like Software consulting and services, Software development and Software maintenance services, web application designing and website maintenance services will have their revision in rates. Those who have entered in to an agreement of Annual maintenance contract AMC may have to work out on the current project cost effectiveness.

It becomes difficult for the small entrepreneurs like us, GoITWay to adjust to such increase in rates coz some of the works taken up are quoted with the price inclusive of taxes and that’s what some of the customers demand for. Some of the data entry services related works are always quoted on the per entry or per record basis and the price is most of the time inclusive of taxes. One can refer to www.goitway.com for services provided by us.