Monthly Archives: November 2015

Swacch Bharat Cess (SBC) on Service Tax made EASY

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 servicesNotification 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

     (Minor Head)

   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.  

Please feel free to get in touch at [email protected] for any further enquiries on the above

“VAT not leviable on E-commerce Websites- Kerala HC

Recently in the case of Flipkart, Kerala High Court rejected the demand on Flipkart on sales to customers within state. Further, it was held that no VAT is leviable on website selling goods via electronic mode. The HC rejected the view of the revenue department that e-commerce transactions are subject to “sales on approval” which take place within the State and hence, the assesee is liable as an ‘agent’ to the seller.

In the said case, the department of Revenue of the state of Kerela held the view that ecommerce transactions are deemed to be completed in Kerela since the goods are delivered and payment thereof is collected in the state of Kerela. The department was of the view that the buyers placed orders for goods without knowing the name of the seller or place of supply and the assessee is liable to pay VAT as the transaction.

On the contrary, the assesee argued that as per Article 286 of the Constitution of India and Sec. 3 of CST Act, 1956 tax is payable in the state from where the sales have been occasioned. In the market place model opted by Flipkart, the seller has already discharged tax in full and therefore the place of delivery of goods hold no relevance. Hence no VAT demand should be raised as the assesee i.e. the ecommerce website was only acting as a facilitator to the sale transaction and not as a seller.

The Kerela HC, justifying the assessee’s viewpoint held that no State VAT is leviable on such ecommerce based websites on sales to customers within the state.

The copy of the judgement is still awaited.

Please feel free to get in touch at [email protected] for any further enquiries on the above


Edu Cess And SHE Cess Can Be Used For Payment Of Service Tax After 01-06-2015

CBEC issued Notification No.22/2015-Central Excise (N.T.) dated 29-10-2015 to further amend Cenvat Credit Rules, 2004, so as to allow credit of Education Cess and Secondary and Higher Education Cess paid on inputs/input services and capital goods, to be utilized for payment of service tax in specified circumstances.

It is provided in the notification that Cenvat Credit of Edu. Cess and SHE Cess related to input and capital goods which is received on or after 01-06-2015 in the premises of output service provider can be used for payment of Service Tax on or after 01-06-2015. Similiarly the 50% cess related to capital goods for FY 2014-15 can also be used for payment of service tax on or after 01-06-2015.

Further it is also provided in the said notification that the credit of Education Cess and Secondary and Higher Education Cess paid on input service in respect of which the invoice, bill, challan or Service Tax Certificate for Transportation of Goods by Rail (referred to in rule 9), as the case may be, is received by the provider of output service on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service.

 It may be noted that earlier as per NOTIFICATION NO. 12/2015-Central Excise (N.T.), Dated: April 30, 2015 the CENVAT Credit Rules, 2004 were amended to allow credit of Edu. Cess and SHE Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015.