Will we see multiple service tax rates?

Budget 2016 had hiked the service tax by 0.5 per cent to 15 per cent. The GST Council had already agreed on a four-slab structure as 0, 5, 12, 18 and 28 per cent, reports Economic Times

Budget 2016 had proposed to impose a cess, called the Krishi Kalyan Cess, at 0.5 per cent on all taxable services. The new effective service tax is settled at 15 per cent. While presenting Budget 2015, the FM had increased the service tax rate from 12.36 to 14 per cent. 

This new rate of service tax at 14 per cent was applicable from June 1, 2015. Moreover, from November 15, 2015, Swachh Bharat Cess at 0.5 per cent also got applicable. Therefore, the effective rate of service tax is currently at 14.5 per cent with effect from November 15, 2015. 

For some services, the rate could be set lower at 12 per cent, while for most others it might settle at 18 per cent. Budgets, especially over the last two years, have given the indication that the service tax rate is slowly being increased to bring service tax closer to the expected GST rate of 18 per cent.