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WHETHER SWACHH BHARAT CESS IS CENVATABLE

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 1-12-2015 - According to the statutory provisions for levy of Swachh Bharat Cess (SBC) on value of taxable services in India w.e.f. 15.11.2015, 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 .....

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ry Provisions Sub section (2) of section 119 is very important and relevant to understand the nature of SBC. Let's look at it - (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. A carefu .....

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llip;…. as Service Tax'. It states that cess, called SBC, shall be levied and collected as Service Tax. Thus, there should be no doubt in the mind of legislature, tax collectors and tax administrators that nature of SBC is that of Service Tax only. Section 119(4) deals with proceeds of SBC Accordingly, the proceeds of the Swachh Bharat Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation mad .....

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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 thereunder, as the case may be. Thus, going by entire provisions of section 119, one tends to believe and perhaps rightly so, that SBC is a separate levy but its nature is that of Service Tax. Cenvat Credit of SBC However, on whether SBC shall be subject to Cenva .....

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