CA Jainal Shah
♠ In Union Budget 2015, a provision was made for levying a Swachh Bharat Cess (SB Cess) on all or any of the services, for the purposes of financing and promoting Swachh Bharat; to contribute for a clean India. The funds thus raised shall be used to build and provide proper toilet facility.
♠ Recently, the Central Government vide Notification No. 21/2015-ST dated 06-11-2015 has appointed November 15, 2015 as the date from which, SB Cess shall be effective at the rate of 0.5%. SB Cess shall be levied on value of all taxable services except those listed in the negative list.
♠ SB Cess would be over and above the present 14% Service tax rate.
♠ SB Cess to be charged and shown separately in Invoice:
- SB Cess would be over and above the present Service tax rate of 14%. Hence, SB Cess needs to be charged separately on the invoice, needs to be accounted separately in the books of account and needs to be paid separately under separate accounting head which may be notified.
FEW CONCERNS OVER SBCess Applicability
i. Treatment of SB Cess for ongoing transactions for which services is already rendered but invoice is yet to be generated or vice versa case where advance is received and service is yet to be rendered.
ii. Under which Accounting head SB Cess is required to be deposited?
iii. Whether Cenvat credit of SB Cess would be available or not as there is no amendments proposed in the Cenvat Credit Rules, 2004 pertaining to availment of Cenvat credit of SB Cess?
iv. Calculation of value of taxable services under Abatement Notification?
♠ With the aim of Central Government to introduce GST by April 1, 2016 wherein all the Cess on goods and services will be subsumed under the GST, the logic of introducing such a levy under the banner of SB Cess may be for just few months and there are chances that it may lead to hue and cry in the industry.
♠ SET UP REQIURED TO BE CONFIGURED IN TO THE MICROSOFT DYNAMICS AX 2012 R2 / R3 ERP TO CATER THE REQUIREMENT OF SB CESS:
1. Creation of Tax Component named “SB-Cess” under General Ledger> Setup > Sales Tax > India > Tax components.
2. Assign new ledgers to the Tax Ledger Posting Group General Ledger> Setup > Sales Tax > India
a. As a new Cess line is required to be shown on the invoice, I would recommend here to create two ledger codes for SB Cess so as to capture all the payables and receivable amounts in these ledger codes.
3. After creating the ledger posting profile now we need to create Tax Code as “SBCess” in General Ledger> Setup > Sales Tax > Sales Tax Codes
a. And further we need to assign the value which is notified at 0.5% effective from 15th November, 2015.
4. Now Add this ‘SBCess’ in the General Ledger> Setup > Sales Tax > Sales Tax Group
i. By completing the above steps, users are done with all the set up pertaining to activating the SB Cess on the invoice lines.
ii. As per the provisions, SB Cess is required to be shown separately on to the invoice. So please check whether it is coming correctly on to the Sales Invoice Print as this document is customized as per the need of the client’s business.
iii. User are required to select the proper Sales Tax Item Group on to the invoice line considering the provisions of the Rule 4 of the Point of Taxation Rules, 2011 and Section 67A of the Finance Act.
iv. Percentages of abatement for the Reverse Charge Mechanism (RCM) required to be configured under Item sales Tax group Form only.