What is the Service Tax rate?
It was announced that Service Tax rate has been enhanced to 14% and there would be no Education Cess. We are told that some people have already started collecting 14% Service Tax as they believe it would have immediate effect under the Provisional Collection of Taxes Act. They were surprised when we told them, that the enhanced rate of Service Tax will be applicable only from a date to be notified after enactment of the Finance Bill. If excise duty is applicable immediately, why not service tax? We explained that Provisional Collection of Taxes Act does not apply to Service Tax. Strange and difficult to comprehend? It must be noted that 14% Service Tax will be applicable from a date to be notified later.
But it appears that some people still have doubts and it is heard that many people plan to collect 14 per cent Service Tax from 1st April 2015.
The Nagpur Commissioner recently clarified,
It has come to the notice of this office that though the new Service Tax rate of 14% has not yet been given effect, some of the service tax providers have started billing & recovering the amount of Service Tax at the rate of 14% from their customers. This practice is not only completely illegal but amounts to collecting consideration from the general public which is not so required to be collected as Service Tax .
The Commissioner has appealed to bring to the notice of the Department, any such instance.
It must be noted that 14% Service Tax will be applicable from a date to be notified later - after enactment of the Finance Bill. If somebody charges 14% from 1 st April, don't pay.
Nagpur Commissioner - an example for courteous communication : The communication from the Nagpur Customs, Central Excise and Service Tax Commissionerate is an example for courteous correspondence by Government officers.
The Commissioner 'appeals' to bring instances of excess collection to his notice. His office looks forward to your co-operation in this regard . And finally he says 'Help us to help you'.
This is how public servants should behave.