Press Information Bureau
Government of India
Ministry of Finance
12-November-2015

Clarifications on Swachh Bharat Cess

Swachh Bharat Cess will come into effect from 15th November 2015, at the rate of 0.5% on all services, which are presently liable to service tax. This will translate into a tax of 50 paisa only on every one hundred rupees worth of taxable services. The proceeds from this cess will be used for financing and promoting Swachh Bharat initiatives.

Some doubts are being raised with respect to the levy of Swachh Bharat Cess, such as,-

(i) what would be Swachh Bharat Cess on services where service tax is being paid under the alternative rates of service tax?

(ii) what would be the value of taxable services for computation of Swachh Bharat Cess?

(iii) whether reverse charge mechanism would apply for the levy of Swachh Bharat Cess?

(iv) what would be the point of taxation for Swachh Bharat Cess ?

In this regard, it is clarified that answers to the above queries are in the provisions of sub-section (5) of Section 119 of the Finance Act, 2015 by which all the provisions of service tax as contained in Chapter V of the Finance Act, 1994 have been made applicable to Swachh Bharat Cess. It is, thus, very clear that all the provisions including those related to computation of taxable value, assessment, exemption, payment, penalty applicable to service tax would also apply in respect of Swachh Bharat Cess.

Service tax is presently levied at alternative rates in respect of service provided by air travel agents, life insurance service, service in relation to sale/purchase of foreign exchange including money changing and service by lottery distributors/selling agents, subject to fulfilment of conditions prescribed under the Service Tax Rules. Option has been provided for levy of Swachh Bharat Cess also at alternative rates in respect of the above mentioned services. The alternate rate of Swachh Bharat Cess would be:

Service Tax Liability (at the alternate rate) X 0.5/14.

Also Read Notification No. 25/2015 Dated 12th November 2015 on above

As regards the taxable value for the levy of Swachh Bharat Cess, it would be the same on which service tax is levied. Swachh Bharat Cess would be calculated on abated value or value arrived at under the Service Tax (Determination of Value) Rules, 2006, as the case may be. For example, the effective Swachh Bharat Cess in respect of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, having the facility of air–conditioning or central air-heating in any part of the establishment, would be 0.5% of 40% i.e 0.2%. The cumulative service tax and Swachh Bharat Cess liability would be 5.8% (14.5% of 40%) of the total amount charged.

Also Read Notification No. 23/2015 Dated 12th November 2015 on above

Similarly, a person liable to pay service tax on reverse charge basis would be laible to pay Swachh Bharat Cess also on reverse charge basis. As regards Point of Taxation, since this levy has come for the first time and all services (except those services which are in the Negative List or are wholly exempt from service tax) are being taxed, it is a new levy, which was not in existence earlier. Rule 5 of Point of Taxation Rules would be applicable in this case. Therefore, in case where payment has been received and invoice is raised before the service becomes taxable, i.e., prior to 15th November, 2015, there is no lability of Swachh Bharat Cess. In case payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015.

Also Read Notification No. 24/2015 Dated 12th November 2015 on above

Thus, it may be seen that all issues relating to Swachh Bharat Cess are addressed in the Service Tax provisions itself by virtue of the applicability of Chapter V of the Finance Act, 1994 and the rules made thereunder.

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Category : Service Tax (3401)
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Tags : Swachh Bharat Cess (49)

One response to “CBEC Clarifications on Swachh Bharat Cess”

  1. Sangeeta says:

    Whether tds on swachh bharat cess would be deducted ?

  2. Kishore Shinde says:

    Cenvat credit is avaiable

  3. K.Sriniavsan says:

    Any circular issued by Income tax department regarding TDS on SBC.

    Whether TDS to be deducted on SBC or Not.

    Clarification required

    Regards

    K Srinivasan

  4. Kamal says:

    Whether TDS has to be deducted on SBC amount???

  5. lingadevaru says:

    like this magzine every day

  6. Ashok says:

    Where service is provided prior to 15th November but invoice is raised after 15th November and payment is also received after 15th November then SBC would be applicable or not? (In case of GTA such incidences will happen)

    • Neha says:

      In case service provided before the service became taxable and invoice is raised on or after 15.11.2015 and payment received on or after rate will be 14.50%.. and SBC IS APPLICABLE

  7. D. Saha says:

    THE PAYMENT CODE SHOULD BE THE RESPECTIVE SERVICE CODE THROUGH WHICH INTEREST/PENALTY/OTHER RECEIPTS ARE MADE. AT LEAST THE ST3 APPEARS TO BE SO.

  8. visuiyer says:

    A diwali gift by Modi ji….
    Poor Indians paying tax (even if not collected)
    on Income – Income tax
    on expenditure – Service tax
    on Savings – Service tax on Insurance
    on Borrowings – service tax on Credit cards…

    Modi ji again ONCE AGAIN take a place in Guinness…!!

  9. Bharat Bhushan says:

    This circular is not available on website of CBEC. Please provide source of this circular.

  10. Ashok Aggarwal says:

    So far as accounting code is concerned, I am sure it will be notified before the payment for November is due. However the eligibility of Cenvat credit has to be brought in force by amending CCRs, 2004.

  11. Chandravijay Shah says:

    Certainly Yes

  12. Sandeep Agarwal, adv says:

    No cenvat credit would be available as no amendments have been made in cenvat credit rules

  13. CA Sunil Jain says:

    WHAT IS ACCOUNTING CODE FOR PAYMENT OF SAID CESS WHILE MAKING PAYMENT THROUGH CHALLAN FOR CESS, INTT. ON CESS ETC.
    Because it is cess definately separate code will be other than tax.

  14. Pm says:

    Whether Cenvat credit of the SB cess would be available to the assessee or not

  15. Bishal Koirala says:

    payment mode..either seperate or inclusion with 14%

  16. Rakesh Dawar says:

    Sir

    Whether credit of SBC paid on Input services will be available?

    • Neha says:

      There is no any amendment in Cenvat Credit Rules 2004 regarding availment and utilisation of SBC ..So that no any credit would be admissible ….

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