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KRISHI KALYAN CESS A NEW CESS IS BORN

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 19-3-2016 - The Government of the day believes that taxation is a major tool available to the Government for removing poverty and inequality from the society. To a common man, tax, surcharge or cess does not make any difference as all these modes of extracting money from the citizens have been used since many years. However, one may understand that while taxes go to common pool in Consolidated Fund of India, surcharge and cesses are specific purpo .....

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agriculture, rural economy and clean environment. The Union Budget has introduced two new cesses in the name and style of Infrastructure Cess and Krishi Kalyan Cess, former in the nature of excise duty and later as Service Tax. Clean Energy Cess has been renamed as Clean Environment Cess while enhancing the cess by 100 percent. These cesses, in nutshell are as follows: Cess W.e.f. Target (Rs.) Clean Environment Cess 01.03.2016 26150 crore Infrastructure Cess 01.03.2016 3000 crore Krishi Kalyan C .....

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are spent for the desired objectives. Krishi Kalyan Cess (KKC) as New Cess The Union Budget, 2016 proposes in Finance Bill, 2016 to impose a new Cess, called the Krishi Kalyan Cess, @ 0.5% on all or any taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June, 2016. Input Tax credit of this cess will be available for payment of this cess. The proc .....

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e the following announcement (vide para 152 of Budget speech) on KKC- I propose to impose a Cess, called the Krishi Kalyan Cess, @ 0.5% on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016. Input Tax credit of this cess will be available for payment of this cess. Clause 158 in Chapter VI of the Finance Bill, 2016 contains the propos .....

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i Kalyan Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force. (4) The proceeds of the Krishi Kalyan Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Krishi Kalyan Ces .....

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s made thereunder, as the case may be. The 'statement of objects and reasons' provides that clause 158 of the Bill seeks to insert new Chapter VI so as to levy a cess to be called the Krishi Kalyan Cess, as service tax on all or any of the taxable service for the purposes of the Union for financing and promoting initiatives to improve agriculture or the for any other purpose relating thereto. The CBEC's clarificatory letter on Budget clarification (vide DOF No. 334/8/2016-TRU dated 2 .....

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as Service Tax on all or any taxable services at the rate of 0.5 percent on the value of taxable services. KKC has been levied for the purpose of financing and promoting initiatives to improve agriculture or for any other purpose relating to it. KKC shall be in addition to any cess or Service Tax leviable on such taxable services under Chapter V of Finance Act, 1994. The proceeds of KKC shall be credited to the Consolidated Fund of India and subject to appropriation by Parliament by law. Centra .....

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levied on services only which could be on all services or some of the services (as the provision provides for '….on any on any or all the taxable services…..') There may be a notification issued prior to 01.06.2016 making KKC applicable to some services or class of services (rather than on all services). It is expected that some basic services may be spared from levy of KKC. KKC shall be chargeable on invoices separately as KKC like Swachh Bharat Cess. Charging Service Tax .....

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