Soon after the Diwali festivities, you will have to shell out a bit more for all the services so that the country can become cleaner.
The government has decided to levy the Swachh Bharat Cess proposed in the budget on all services that are at present taxed from November 15. All services, including air travel, telephony, eating out and banking will become expensive from November 15. The cess will be levied at the rate of 0.5%, the finance ministry said in a statement, adding that it will have only marginal impact on consumer prices. The additional cess would be over and above the 14 percent Service Tax rate which is already being levied and may yield the government an additional about Rs 400 crore during the remainder of the current fiscal. ”
Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives,” the statement added.
Swachh Bharat is among the major initiatives of the Modi government, which has embarked on a major drive to ensure cleanliness across the country.
In the Finance Bill, the government had obtained an enabling provision to levy up to 2 percent tax, but it ultimately settled for 0.5 percent.
Swachh Bharat Cess now made applicable from November 15, 2015 – Notification No. 21/2015-ST dated November 6, 2015
Swachh Bharat Cess at the rate of 0.5% will be levied on value of all taxable services – Notification No. 22/2015-ST dated November 6, 2015.
Refer to the below link for notifications:
The below details will give you picture of how your tax will be calculated:
With the addition of 0.5%, the service tax will go up from 14% to 14.50%. This means for every Rs.100 paid for a service you will be taxed Rs.14.50.
Quick summary of SBC for laymen:
1) Swachh Bharat Cess (SBC) will be effective from 15/11/2015
2) Rate of tax will be 0.5% of the value of service.
3) Effective rate 14.5%
4) SBC is to be shown separated i.e. ST 14% & SBC 0.5%
5) Accounting code for SBC IS AS UNDER :
i) Swachh Bharat Cess-0044-00-506
ii)Tax Collection- 00441493
iii)Other Receipts – 00441494
v)Deduct Refunds- 00441495
6) SBC has to be paid in Cash only,(credit cannot be availed) and also no Cenvat Credit is allowed of SBC.
All the above information has been deeply researched for the layman to understand the overall summary of how SBC will be calculated.
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