Don't pay 14% service tax as yet, it's illegal

Finance Minister Arun Jaitley, in his budget speech of 2015, had hiked service tax to 14% from the current 12.36%. Parts of the service industry, including restaurants, started charging their customers are higher rates from April 1. However, they missed an important detail. The higher service tax is not yet in force as the Indian Parliament is yet to pass the Finance Bill. 

In an interview to CNBC TV 18, Kaushal Srivastava, Chairman of Central Board Excise and Customs (CBEC) said that it is illegal for the industry to charge higher service tax and warned it against doing so. 

He said that the service tax rate is still 12.36% across the board and all industries must charge only this and not 14%. 

Many consumers have reported that restaurants have started charging for higher service tax from April 1 pushing up their food bills. 

CNBC reported him saying, "“We have already issued instructions to our field formations that it should be made known to the public by issue of public notices. If any instances of overcharging of service tax rate coming to notice of any members of the public, they are welcome to report it to our local officers.”

So, the next time you go to your favourite restaurant for that sumptuous meal, do keep an eye on what service tax it charges you.