CA Hitesh Kothari
The Finance Act, 2016 under Chapter VI has introduced a new cess named ‘Krishi Kalyan Cess’ (KKC) on all taxable services at the rate of 0.5% of the value of such services for the purposes of financing and promoting initiatives to improve agriculture or any other purpose. This cess would come into force from 01.06.2016 and would be levied and collected ‘as service tax’ on the value of all taxable services. This cess would be in addition to any cess or service tax leviable on such taxable services. It is in the nature of a tax and not a fee since there is no quid pro quo between the payer (assesses) and the recipient (Government).
Relevant Rules to understand the implication of new levy:
Announcement in respect of following is still awaited:
Let us analyse above Rules one by one:
a) provision of service;
b) invoicing; and
c) receipt of payment.
Where two events occur before the effective date i.e. 01st June, 2016, then the old rate would be applicable.
Summary of the above:
|Sr. No.||KrishiKalyanCess (Minor Head)||Tax Collection||Other Receipts (Interest)||Deduct Refunds||Penalties|