Swachh Bharat may add 1% extra service tax to 5-star hotel bills

NEW DELHI: The government has identified five “high-end services”, including bills in four- and five-star hotels, which will attract additional service tax to fund Prime Minister Narendra Modi’s Swachh Bharat campaign, and leave a slightly bigger dent in your pocket.

Sources, however, indicated that against an “enabling provision” of levying up to 2% cess over the 14% service tax, the government is expected to notify an additional 1% levy.

The government aims to mop up around Rs 14,000 crore annually for the Swachh Bharat Kosh, which includes the 1% cess on the five services, apart from a levy of Rs 200 a tonne on coal. Details on the other four services were not available.

The move to impose the service tax is expected to fetch the government around Rs 2,000 crore a year, while coal is expected to generate around Rs 6,000 crore. Further, public sector companies are being asked to chip in with a part of their corporate social responsibility (CSR) contribution to the fund.

While increasing the service tax from 12% to 14%, the government had proposed the cess, but had clarified that it would be imposed only on select items and would be applicable from the day it was notified. The twin moves have come in for criticism as it is seen to be impacting household budgets but the government has argued that the move is a transition towards the rollout of Goods and Services Tax. The Centre is targeting to launch the ambitious tax reform from April next year.

But the stage for the additional levy had been set even before the budget when the government sought legal opinion to impose the cess on spectrum that is being auctioned.

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Source:Timesofindia