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Krishi Kalyan Cess on all taxable services

Venkat May 17, 2016
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Budget-2016_India

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.

 

 

 

 

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