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Kkc applicability

vyjayanthimala (Accounts) (245 Points)

06 June 2016

Sir

Services provided/received for the month of May.2016

If Bill raised on 31/05/2016 or in 1st week of June.2016.

But payment is in June.2016. What will be the Status

of KKC ?

please clarify

mala

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13 Replies

CA Rohit Jain (Practice) (1865 Points)
Replied 06 June 2016

Since the service is received before 01 june 2016 and invoice is also raised before 01 june 2016, then Point of taxation would be before 01 june 2016. Hence KKC is not applicable.

Read Rule 4 of Point of taxation of service rules 2012 for better understanding

1 Like

rohit (Accounts) (101 Points)
Replied 06 June 2016

But payment is received after 01 june 2016 and as per ammendment KKC aill be applicable on every payment received after 01.june 2016.

ravi teja (CA) (37 Points)
Replied 06 June 2016

For KKC Rule 5 of Point of Taxation Rules Apply

If the Payment is received before 1st june 2016 and Invoice is Issued before 14th June 2016 then KKC will not Apply

In your case KKC will Apply as payment is received after 1st June 2016.

rohit (Accounts) (101 Points)
Replied 06 June 2016

It means if i have a debtors(income+servicetax) of 2 crore kkc will be applicable on all?

CA Rohit Jain (Practice) (1865 Points)
Replied 06 June 2016

I am really sorry in your case KKC will be applicable

1 Like

rohit (Accounts) (101 Points)
Replied 06 June 2016

Thanks for replying ,then i need to debit all my clients with kkc, one more thing, Debtors include income with service tax and as they are old one i m unable to seprate them can i debit and pay the kkc on full debtors it also include a little amount of non taxable amount.

ravi teja (CA) (37 Points)
Replied 06 June 2016

As Rule 5 of Point of Taxation does not take into consideration When an invoice has been raised and Services are being provided before 1st June 2016 in this case the Rule 3 of POT applies as it is the default rule which states that the Point of Taxation is Date of Issue of Invoice or the date when Advance is Received which ever is Earlier. So the Invoice date is point of Taxation

(Remember the point is subject to litigation as the department may take a stand that it is taxable and treat all debtors as taxable)

ravi teja (CA) (37 Points)
Replied 06 June 2016

So If service tax is paid for the debtors before 1st June 2016 then wait for the department clarification and don't pay KKC as it is subject to litigation
For service tax on unpaid Invoices from 1st May 2016 pay KKC it is better.

Chirag Parmar (Service) (65 Points)
Replied 06 June 2016

Since KKC is new levy, Rule 5 of POTR, 2012 would be applicable. As per sub rule (a) of rule 5 of the said rules, if invoice issued and payment is received then new levy would not be applicable.

in instant case if invoice is issued and payment is received on or before 31-05-2016 then KKC would be levied.

Chirag Parmar (Service) (65 Points)
Replied 06 June 2016

*would not be levied.

CA Ankur Maheshwari (Sr. Partner ) (53 Points)
Replied 07 June 2016

Dear All, This is to inform you all that the Central Government has introduced levy of Krishi Kalyan Cess (KKC) with effect from 01-Jun-2016. KKC shall be levied @ 0.5% on value on taxable service. Unlike SBC, credit of KKC can be availed for payment of output KKC only. We are herewith tabulating the various scenarios for applicability KKC @ 0.5% on services provided: Service completion date Invoice date

Service completion date	Invoice date	Consideration date	Levy of KKC	Remarks
31-May-16	1-Jun-16	1-Jun-16	No	On a plain reading, KKC may be said as applicable. However, one can defend on the principle that KKC cannot be levied or charged when the services itself was completed prior to levy and invoice has been raised within 14 days.
31-May-16	15-Jun-16	31-May-16	Yes	Invoice not raised within 14 days
31-May-16	13-Jun-16	31-May-16	No
31-May-16	31-May-16	31-May-16	No

1 Like

rohit (Accounts) (101 Points)
Replied 07 June 2016

Thanks for Reply, It means If Service have been given before 31.05.16 Invoice issued on 31.05.16 No KKC will be applicable.

karan jit singh (Consultant) (1299 Points)
Replied 11 June 2016

Originally posted by : vyjayanthimala
	Sir Services provided/received for the month of May.2016 If Bill raised on 31/05/2016 or in 1st week of June.2016. But payment is in June.2016. What will be the Status of KKC ? please clarify mala