The new service tax rate of 14% will come into effect from June 1, in a move likely to make eating out in restaurants, insurance and phone bills, among many other things, more expensive.
The current service tax is 12.36%, including education cess.
Top official sources said the new rate of 14%, which was announced by finance minister Arun Jaitley in his budget speech of 2015-16, would come into effect on June 1.
The government hopes to pass the goods and services tax (GST) bill in the monsson session of Parliament, which will usher in a country-wide single indirect tax regime. GST will allow states to collect service tax; as of now, it is a central tax.