Budget 2016: Brace up to pay more as govt may hike service tax to 16%

One might have to shell out more when eating in restaurants or paying mobile bills as the effective service tax may go up after the upcoming Union Budget. CNBC-TV18 learns that the government is open to hiking rates and may use indirect tax to fund spending in FY17. In addition to the Swachh Bharat Cess of 0.5 percent already levied, sources say the service tax rate is projected to rise by 2 percent to 16 percent. It currently stands at 14 percent. Speaking to CNBC-TV18, Satya Poddar, Tax Partner, Policy Advisory Group, EY, says that the move of increasing service tax would be retrograde.Meanwhile, he does not expect any good news in Budget and thinks it would only tinker with tax rates.Watch video for more