Introduction:
- India Finance Budget 2016 has been introduced a new cess (Krish kalyan cess) which would be levied @ 0.5% on the value of taxable services. This levy would be over and above the existing service tax rate (14%) and Swachh Bharat cess (o.5%).
Reason for new Cess
- Krishi kalyan cess has been introduced for the purpose of financing and promoting initiatives to improve agriculture.
- Modi govt is trying to formulize the tax rate with GST.
Applicability
- Krishi Kalyan cess would be levied on all taxable services and applicable w.e.f 1st June 2016.
Total Service tax levy is {rate 15%}
- Existing service tax rate is 14%
- Swachh Barat Cess rate is 0.5%
- Krishi Kalyan Cess rate is 0.5%
Cenvat Credit
- Krishi Kalyan Cess Cenvat credit eligibility limited to Service provider only.
- Cenvat on krishi kalyan Cess should be adjusted against Krishi kalyan cess liability only.
- Manufacture is not eligible to take cenvat credit on New cess levy, which resulting to increase the product cost.
