CA Vinay Lunkad S

Vinay Lunkad SSwach Bharath Cess (SBC) to be levied @ 2% on all or any taxable services on the VALUE of such services as per S-119 of the Finance Act 2015 w.e.f 15th Nov 2015 as per Notification No.21 dated 6th Nov 2015. However Notification No.22/2015 Dated 6th Nov 2015 of service Tax exempts Swach Bharat Cess in excess of 0.50% of the value of taxable services.

♠ Value on Which Swachh Bharth Cess is applicable or needs to be computed?

For ex; For a hotel for room rent service following 2 alternatives are possible for service Tax Computations and SBC:-

Particulars Alternative 1 Alternative 2
Room Rent(A) 15,00,000 15,00,000
Less:Abatement @ 40% 6,00,000 6,00,000
Abated Value (B) 9,00,000 9,00,000
Add:ServiceTax on above @ 14% 1,26,000 1,26,000
Add:SBC @ .5%        4,500        7,500
(On B) (On A)

Alternative 1:- As per S-119(2) of Finance Act 2015 SBC will be levied on Value of services and not the taxable value

Alternative 2:-As per S-119(2) of Finance Act 2015 though the wordings used are value of services but applying the principle of ejusdem Generis (Interpretation of Statutes – specific expressions) wherein value of services shall mean value of taxable services.

A clarification in this regard is expected from the Finance Ministry.

♠ As per Cenvat credit Rules 2004 , Rule 3 no CENVAT Credit can be claimed as SBC is levied under S-119 of the Finance Act 2015 and not S-66 of the Finance Act

♠ As per S-119(5) of Finance Act 2015 for the purposes of Levy and collection all the provisions of Chapter V of Finance Act 1994 and rule thereunder including refunds, exemptions from tax interest and penalty shall apply whereby Point of Taxation Rules 2011 for the purpose of levy and collection will apply and the in case of delay in payment of service tax interest and penalty provisions will be levied accordingly.

♠ In case of continuous supply of services as per point of Taxation Rules 2011 SBC will be charged on all bills raised post 15th Nov 2015

♠ Unlike Cess which is usually charged on Tax amount SBC is charged on Value of services and not Tax.

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0 responses to “Swachh Bharth Cess- Is it on Taxable Value or on Abated Value?”

  1. Mohd Ghaus says:

    It is burden for the general public , BJP Government is ignoring public porblems that is not good for country, public and BJP. If the governments wants to revenue additional tax then this cess is imposed that services which does not effect to public.

  2. Rama Krushna Sahu says:

    It is simply an extra burden for the general public. It may be SBC (Swachh Bharth Cess) or (Swachh Midi Cess) or (Swachh BJP Cess), should be charged to the business class only and not to collect from the public. The Present Govt. is ignoring the general public’s problems. Thinking for nation is Good but ignoring the general public is worst for the nation. The govt. should understand this. I think if this Govt. continues for another one year, I am sure they will make you aware the feelings of 5 Star Hotel’s food at your home. But simultaneously to whom we will choose, at least this Govt. gives you the feelings of 5 Star foods, the other Govt. will make you slave again.
    Oh God Save India & Indians….

    Rama Krushna Sahu

  3. Grape says:

    Stop paying taxes….as Not a single taxpayer is getting better life.The person who pays taxes becomes FOOL

  4. ganeshan says:

    In one way it is good that instead of 2% as proposed in the Finance Budget, it is only 0.5% levy. But if GST is to be implemented in 2016 then was this change needed ?

  5. C P CHUGH says:

    Truely said, while Mr Arun Jaitely Hon’ble FM cried foul for Tax Terrorism under UPA, its tax policies are no better than UPA and at time worse than those.

  6. VIVEK SEHGAL says:

    There is no control on the Govt. Mr.Rajesh has rightly said that the present govt. too is now following the steps of the previous Govt. The Service Tax has become so complicated that even the expert on service tax can not be sure that he is 100% correct. So much circulars, notifications, abatement, exemptions have complicated the Service Tax Act and Rules.

    On the other hand, the present levy in the shape of Swachh Bharth Cess is another way of looting the common people of this country by legal way.

  7. Rajesh,Mumbai says:

    NDA government is also following footsteps of UPA which time to time complicated laws and kept business community on toes. NDA already increased Service tax from 12.36 to @ 14% and recently they again levied extra excise duty on petrol.This extra 0.5% should have been avoided because it will definitely add fuels to already worsening image of NAMO government.Inspite of expanding Tax base, there are looting existing tax payers.Until Existing corrupt minded bureaucrats do not retire, they will continue to misguide illiterate class of politicians and we can not hope for better governance.

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