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Clarifications on various aspects of Swachh Bharat Cess

Service Tax - By: - Bimal jain - Dated:- 14-11-2015 Last Replied Date:- 16-11-2015 - Dear Professional Colleague, Recently, the Central Government vide Notification No. 21/2015-ST and 22/2015-ST,, both dated November 6, 2015 had appointed November 15, 2015 as the date from which, Swachh Bharat Cess ( SB Cess )at the rate of 0.5% on value of all taxable services shall be applicable. However, a sudden imposition of SB Cess created lot of confusions like to calculate value of taxable services under .....

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effective rate of 0.5%of the value of all taxable services was fixed to clarify that SB Cess will be levied on value of taxable services after availing the benefit of abatement by way of an exemption provided vide Abatement Notification No. 26/2012-ST dated June 20, 2012 i.e. SB Cess would be computed on abated value. For example, in case of GTA services, presently, abatement of 70% is available and accordingly, Service tax is required to be paid on 30% of value of taxable service after exempti .....

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r the purposes of SB Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.. Thus, SB Cess would be levied in the following manner: a. Computation of tax under Works contract: In terms of Rule 2A of the Service Tax (Determination of Value) Rules, 2006, Service tax along with SB Cess needs to be applied on taxable value. Accordingly, effective rate of tax would be as under: In case of original works: 5.8% (14.5%*40%); and Other than original .....

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ication No. 24/ 2015-ST dated November 12, 2015: The Reverse Charge Notification No. 30/2012-ST dated June 20, 2012 prescribes the specified services under full reverse charge wherein 100% service tax to be paid by the Service Recipient and under partial reverse charge wherein both the Service provider and service recipient has to pay specified percentage of Service tax.Now, the Central Government vide Notification No. 24/ 2015-ST dated November 12, 2015, has explicitly clarified that Service ta .....

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for services, namely, air travel agents, insurance premium, purchase & sale of foreign currency and lottery. Now, the Central Government has amended Service Tax Rules, 1994 vide Notification No. 25/ 2015-ST dated November 12, 2015 and thereby, inserted sub-rule (7D) after (7C) under Rule 6 as under: (7D) The person liable for paying the service tax under sub-rule (7), (7A), (7B) or (7C) of rule 6, shall have the option to pay such amount as determined by multiplying total service tax liabil .....

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Section 3, Sub-section (i) vide number G.S.R. 843 (E), dated the 6th November, 2015, and the option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances. In other words, if Service tax is payable at an alternative rate, SB cess would also be computed in proportion to such alternative rate in following manner: Total Service tax liability calculated under Rule 6(7)(7A), (7B) or (7C) * 0.5 14 F .....

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ail_notification.asp?ID=118305 https://www.taxmanagementindia.com/visitor/detail_notification.asp?ID=118304 Point of Taxation It is pertinent here to note that the Finance Ministry in its Press Release dated November 12, 2015 has clarified that for determining event when the new levy i.e. SB Cess will be leviable ontaxable services, norms laid down in terms of Rule 5 of the Point of Taxation Rules, 2011 would apply in the following manner: (i) in case where payment has been received and invoice .....

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n respect of such service is not issued by November 29, 2015. An illustrative table to above clarification is given as under: S. No. Date of applicability of SB Cess Date of Invoice Date of Payment Received Applicability of SB Cess 1. 15thNovember, 2015 25thNovember, 2015 1stNovember, 2015 No 2. 15th November, 2015 30th November, 2015 1st November, 2015 Yes 3. 15th November, 2015 1st November, 2015 1st November, 2015 No 4. 15th November, 2015 16th November, 2015 16th November, 2015 Yes Our Comme .....

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be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. The literal interpretation of the charging Section 66B of the Finance Act means that the levy of Service tax is on the value of all taxable services provided or agreed to be provided . However, the collection of Service tax may be shifted to any point/ stage/event, in any manner, as prescribed by the Rules made in this behalf. The Hon ble Supreme Court in the case of All India Federa .....

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the matter is subjected to debate as to whether SB Cess would be leviable on a service rendered prior to November 15, 2015 when SB Cess was not applicable at the time of its rendition, merely because its payment is received on or after the date of levy or the invoice is not issued within 14 days of the date of levy. Here it would not be out of place to mention that POT Rules were framed by the Central Government in exercise of the powers conferred under Section 94 of the Finance Act, 1994 and su .....

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