SWACH BHARAT CESS OF 0.50%
The Central Government in the Union Budget 2015-16 proposed to Levy a Swach Bharat Cess at the rate of 2% on all applicable services and accordingly the Government has notified on 6th November, 2015 that there shall be levied a “Swach Bharat Cess” at the rate of 0.5% which will be effective from 15th November, 2015, the Government earlier proposed the rate of 2% for the Swach Bharat Cess. Thus a Cess at 0.5% will be levied on the value of all the taxable services.
Following are the notifications issued by Government regarding the applicability of Cess:
- 21/2015-ST dt. 06-11-2015
- 22/2015-ST dt. 06-11-2015
The Government has decided to levy the cess to give boost to the Flagship programme of the Government i.e. “Swach Bharat”. Thus accordingly the Service (Point of Taxation) Rules, 2011 have to be taken care off whether there will be any applicability of the Cess with regard to the date of payment or raising of invoice. The Government further clarified that cess shall be levied on the abated value.
Rules 4 for the determination of Point of Taxation Rules, 2011 is as follows:
|
S.No |
Particulars |
Action |
|
1 |
Where the invoice for the service is issued and payment is received after change in effective rate of tax, the POT shall be date of Date of invoice or payment whichever is earlier or |
Date Of Invoice Or Payment Whichever Is Earlier |
|
2 |
Where the invoice for the service is issued prior to change in effective rate of Tax but the Payment is received after change in effective rate of tax, the POT shall be date of Date of issue of Invoice or |
the POT shall be date of Date of issue of Invoice |
|
3 |
Where the Payment is also received before the change in effective rate of Tax but the invoice is issued after the change in effective rate of tax, the POT shall be date of Date of Payment |
POT shall be date of Date of Payment |
Hence companies have to plan accordingly and see the applicability of the abovementioned rules.
But the most important point here is that the increase of Service Tax indicates the rate that are likely under the Good and Service Tax (Service Tax will be subsumed) after the notification of the same. Moreover the rates of GST most probably will be from 14% to 16% or it may be higher.
If anyone still have any doubts or need more clarification on how this issue will going to affect your business then please do post your Comment or you can reach me out at :
Jai Bijarnia
Email: jaibijarnia.cs @ gmail.com
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