CA Gaurav Gupta

Central Government has vide Notification No.35/2016-Service Tax dated 23.06.2016, has exempted taxable services from levy of Krishi Kalyan Cess (“KKC”) in cases which satisfies the following two conditions:

– Where invoices have been raised prior to 01.06.2016; and

– Where provision of service has been completed prior to 01.6.2016.

Accordingly, the concern of the industry that KKC shall be levied on the opening debtors i.e. remaining unpaid as on 31.03.2016 has been duly answered and no KKC shall be levied on such amounts. Though the notification is effective from 23.6.2016, payments of opening debtors as received between 01.6.2016 and 22.6.2016 can still be a cause of litigation, however, we trust that the government would read the Notification to provide relief to their assesses for such period also.  It is also important to mention that the provision of service should be completed in total and no relief in terms of proportionate completion is mentioned in the notification.

Thus, the levy of KKC can be explained as under:

Situation Services provided Invoice Issued Payment received Whether KKC applicable
Situation A Before 01.06.2016 Before 01.06.2016 Before 01.06.2016 No (rule 5)
Situation B Before 01.06.2016 Before 01.06.2016 After 31.05.2016 Exempted (35/2016)
Situation C Before 01.06.2016 After 31.05.2016 After 31.05.2016 Yes
Situation D Before 01.06.2016 On or before 14.06.2016 Before 01.06.2016 No (rule 5)
Situation E Before 01.06.2016 After 14.06.2016 Before 01.06.2016 Yes
Situation F After 31.05.2016 On or before 14.06.2016 Before 01.06.2016 No (rule 5)
Situation G After 31.05.2016 After 14.06.2016 Before 01.06.2016 Yes
Situation H After 31.05.2016 Before 01.06.2016 Before 01.06.2016 No (rule 5)
Situation I After 31.05.2016 Before 01.06.2016 After 31.05.2016 Yes
Situation J After 31.05.2016 After 31.05.2016 After 31.05.2016 Yes

Note: Rule 5 refers to Rule 5 of Point of Taxation Rules, 2011.

The author can be reached at  gaurav@mgsadvisors.com

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3 responses to “Exemption from KKC to services prior to 01.06.2016”

  1. BHASKARAN CHAKRAPANI WARRIER says:

    Well drafted chart. Thanks.

  2. bharat haldankar says:

    hi gaurav,
    thanks for information ,
    i have one doubt that,if situation is 1. service provided before 31.5.16, invoice is raised before 14.6.16 & payment is received after 01.06.16 . then KKC will be applicable on not?
    Kindly clarify doubt .
    thanks once again

  3. Milan Agrawal says:

    Hi Gaurav,

    Very informative and important article. However, I just want to reconfirm whether the date mentioned in 2nd row of Para-2 will be 31.03.2016 or 31.05.2016?

    “Accordingly, the concern of the industry that KKC shall be levied on the opening debtors i.e. remaining unpaid as on 31.03.2016 has been duly answered”

    CA Milan Agrawal

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