Restaurant and phone bills, as well as rail and flight tickets, are set to become more expensive from June 1. With the 0.5% Krishi Kalyan Cess coming into force, all taxable services will be charged an effective service tax of 15%, in addition to the VAT and service charges that customers pay. However, the cess will not be levied on services in the negative list and 47 exempted services, The Hindu reported.

The cess will not be applicable on bills generated and paid before June 1. However, it will apply to those generated before June 1 but paid on or after the date. Experts believe the indirect taxes will amount to an additional burden of Rs 20,600 crore on consumers in the coming fiscal.

The tax collected from the Krishi Kalyan Cess will be directed towards financing initiatives for the benefit of agriculture and welfare of farmers, Finance Minister Arun Jaitley had said. The government also withdrew the proposed 1% tax collection at source on cash purchases of gold jewellery worth Rs 2 lakh or more.