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SWACHH BHARAT CESS (SBC)-FREQUENTLY ASKED QUESTIONS (FAQ)

Service Tax - FAQ-SBC - Dated:- 16-11-2015 - SWACHH BHARAT CESS (SBC) FREQUENTLY ASKED QUESTIONS (FAQ) Background: Chapter VI (Section 119) of the Finance Act 2015 contains provisions for levy and collection of Swachh Bharat Cess (SBC). Now the Government has announced 15th November, 2015 as the date from which the provisions of Section 119 would come into effect (notification No.21/2015-Service Tax, dated 6th November, 2015 refers). Simultaneously, Government has also notified levy of Swachh Bh .....

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on such date as the Central Government may, by notification in the Official Gazette, appoint. (2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent. on the value of such services for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto. (3) The Swachh Bharat Cess leviable under sub- .....

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sub-section (2), as it may consider necessary. (5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, 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 services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules made thereund .....

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a deeper level, a programme for preventive health care, and building awareness. 123. -It is also proposed to have an enabling provision to levy Swachh Bharat Cess at a rate of 2% or less on all or certain services if need arises. This Cess will be effective from a date to be notified. Resources generated from this cess will be utilised for financing and promoting initiatives towards Swachh Bharat. Q.1 What is Swachh Bharat Cess (SBC)? Ans. It is a Cess which shall be levied and collected in acco .....

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services and services in the negative list? Ans. Swachh Bharat Cess is not leviable on services which are fully exempt from service tax or those covered under the negative list of services. Q.4 Why has SBC been imposed? Ans. SBC has been imposed for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto. Q. 5 Where will the money collected under SBC go? Ans. Proceeds of the SBC will be credited to the Consolidated Fund of India, and the Centr .....

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arged, collected and paid to Government independent of service tax. This needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code which would be notified shortly. SBC may be charged separately after service tax as a different line item in invoice. It can be accounted and treated similarly to Education cesses. Q. 8 Whether separate accounting code will be there for Swachh Bharat Cess? Ans. Yes, for payment o .....

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s on tax and we need to calculate SBC @ 0.50% on the amount of service tax like we were earlier doing for calculating Education Cess and SHE Cess? Ans. No, SBC is not a cess on Service Tax. SBC shall be levied @ 0.5% on the value of taxable services. Q. 11 Whether SBC is levied on all or selected services? Ans. The Central Government was empowered to impose SBC either on all or some of the taxable services. Vide notification No 22/2015-ST dated 6-11-2015, Government has notified that SBC shall b .....

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As per section 119 (5) of the Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made thereunder are applicable to SBC also. Thus, the reverse charge under section 68(2) of the Finance Act, 1994, is made applicable to SBC. In this context, to clarify, Government has issued notification No. 24/2015-Service Tax dated 12th November, 2015 to provide that reverse charge under notification No.30/2012-Service Tax dated 20th June, 2012 shall be applicable for the pur .....

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ce Tax + SBC]% would be (14% Service Tax + 0.5% SBC) X 30% = 4.35% (4.20%+0.15%) Q.14 Whether Cenvat Credit of the SBC is available? Ans. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax. Q.15 What would be the point of taxation for Swachh Bharat Cess? Ans. As regards Point of Taxation, since this levy has come for the first time, all services (except those services which are in .....

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ecame taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect .....

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in case of original works and other than original works under the works contract service would be 5.8% [(14% + 0.5%)*40%] and 10.15% [(14% + 0.5%)*70%] respectively. Similar, would be the tax treatment for restaurant and outdoor catering services. Q.17 How would the tax be calculated on restaurant services covered under Service Tax (Determination of Value) Rules, 2006.? Ans. Swachh Bharat Cess would be calculated on the value arrived at in accordance with the Service Tax (Determination of Value) .....

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