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Swachh Bharat Cess 0.5 on value of all taxable services levied from November 15 2015

Service Tax - By: - Bimal jain - Dated:- 9-11-2015 - Pursuing with Mr. Narendra Modi s Dream of Swachh Bharat, 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 initiatives or for any other purpose relating thereto. However, the SB Cess was to be levied from such date as may be notified by the Central Government after the enactment of the Finance Bill, 2015. SB Cess now .....

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ed at a later date. Now, the Central Government vide Notification No. 21/2015-ST dated November 6, 2015 has appointed November 15, 2015 as the date from which, SB Cess shall be effective. SB Cess would be over and above the present 14% Service tax rate. SB Cess at the rate of 0.5% will be levied on value of all taxable services - Notification No. 22/2015-ST dated November 6, 2015: Section 119 of the Finance Act, 2015 (Chapter VI) that contains a provision of new levy of cess called the SB Cess, .....

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rds, w.e.f. November 15, 2015 SB Cess @ 0.5% will be levied on value of all taxable services i.e. the effective rate of Service tax including SB Cess will be 14.5% from November 15, 2015. No SB Cess on services specified under the Negative List of services or otherwise exempted by a notification issued under sub-section (1) of section 93 of the Finance Act, 1994: Notification No. 22/2015-ST dated November 6, 2015 further provides that SB Cess shall not be leviable on services which are exempt fr .....

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012. - Services exempted as specified to certain extent under the Abatement Notification No. 26/2012-ST dated June 20, 2012 To access the Notifications, please click on the link below: https://www.taxmanagementindia.com/visitor/detail_notification.asp?ID=118297 https://www.taxmanagementindia.com/visitor/detail_notification.asp?ID=118298 Open issues that require immediate clarification from the Board: It is worth observing that the Government has not provided any further details of the levy of SB .....

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nts proposed in the Cenvat Credit Rules, 2004 pertaining to availment of Cenvat credit of SB Cess? If no credit is made available, it would directly add to the cost of goods and services. In case of export of goods or services, exporter would not be entitled for refund of SB Cess. c) Calculation of value of taxable services under Abatement Notification: How SB Cess would be dealt while availing the benefit of abatements by way of an exemption provided vide Abatement Notification No. 26/2012-ST d .....

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as taxable value after abatement i.e. 30% for GTA Service for chargeability of Service Tax and SB Cess would be SAME in terms of sub-section (5) of Section 119 of the Finance Act, 2015, which states that the provisions of Chapter V of the Finance Act, 1994 and the rules made there under, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Swachh Bharat Cess on taxable service .....

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ctions for which either certain advance payment is received prior to November 15, 2015 but the completion of provision of service may take place post November 15, 2015 or vice versa. Tussle between Rule 4 of the Point of Taxation Rules, 2011 and Section 67A of the Finance Act, 1994 will again crop up but, we are of the considered view that SB Cess should be levied on value of taxable services rendered on or after November 15, 2015. e) Implication of SB Cess on services specified under Rule 6 of .....

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shall be imposed on the goods manufactured. Computation of tax under Works contract: In terms of Rule 2A of the Service Tax (Determination of Value) Rules, 2006, tax needs to be applied on the value so arrived at the rate of 14.5%. Accordingly, effective rate of tax would be as under: In case of original works: 5.8% (14.5%*40%); and Other than original works: 10.15% (14.5%*70%) c) Computation of tax on Restaurant and Outdoor catering services: In terms of Rule 2C of the Service Tax (Determinatio .....

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nvoice: SB Cess would be over and above the present 14% Service tax rate. 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 separately.With the aim of Mr. Narendra Modi s Government to introduce GST by April 1, 2016 wherein all the Cesses on goods and services will be subsumed under the GST, the logic of introducing such a levy under the banner .....

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