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When Finance Act, 2015 was enacted, rate of Service Tax was enhanced from 12% to 14% and both education cesses subsumed in the enhanced rate of Service Tax. Alongwith, a new cess called Swachh Bharat Cess (SBC) was legislated but its levy was deferred due to political reasons.
Will SBC be leviable on exempted services and services in the negative list The Central Government vide notification No 22/2015-ST dated 6th November 2015, has notifiedthat SBC shall be applicable on all taxable services except services which are either fully exempt from service tax under any notification issued under section 93(1) of the Finance Act, 1994 or are otherwise not leviable to service tax under section 66B of the Finance Act, 1994.
To finance and promote Swachh Bharat initiatives, an enabling provision was incorporated in the Finance Act, 2015 (hereinafter referred as the Act) vide Chapter VI to empower the Central Government to impose a Swachh Bharat Cess (hereinafter referred as SBC) on all or any of the taxable services at a rate of 2% on the […]
Swachh Bharat Cess has been imposed on the value of all taxable services with effect from 15.11.2015 (vide Notification No. 21/2015-ST dated 06.11.2015). The said levy has been imposed by the Central Government by exercising its power under Section 119 of the Finance Act, 2015, which specifically indicates that SB Cess shall be levied and collected, as Service tax .
I think the word Cess included in the name has created lot of fog in the minds of the tax payer as to whetherSwachh Bharat Cess should be applied on service tax value or on the value of services. To remove the doubts of tax payers, the CBEC came with a FAQ, a couple of days back giving clarity with good examples for all the pattern of payments.
The Finance Act, 2015 has empowered the Central Government to impose Swachh Bharat Cess (SBC) upto 2% on value of taxable service. Recently Central Government vide Notification No.21/2015-Service Tax, dated 6th November, 2015 has imposed SBC at the rate of 0.5% on all the taxable services w.e.f 15th November, 2015.
Central Government has imposed a new levy in the name of Swachh Bharat Cess (SBC). (Notification No. 21/2015 – Service Tax dated 06th November,2015). Rate of SBC is 0.50% and it will be levied on the value of taxable services. Now the new rate of service tax plus SBC would be 14.50%. Kindly charge 14.50% on the invoices raised on or after 15th November, 2015.
This festive season, service sector has witnessed imposition of Swachh Bharat Cess (SBC) in very hasty move by government. It was promised at the time of the budget that it would only be imposed on some services. Govt has gone back on its word. Further they have been left with very little time to prepare for this new tax. This owed to lack of clarity over various issues, holiday period and limited time between issuance of notification for levy and actual levy.
Circular No. 188/7/2015-ST Accounting codes have also been allotted by the Office of the Controller General of Accounts for the new Minor Head 506-Swachh Bharat Cess and new Sub-heads as under:
1. SBC shall be levied and collected as service tax on all the taxable services at the rate of 0.5% of the value of taxable service. 2. The Central Government has appointed 15th day of November, 2015 as the date from which provisions of Swachh Bharat Cess will come into effect. 3. SBC is not leviable on services which are fully exempt from service tax or those covered under the negative list of services.
