The Central Government recently imposed a Cess Named Swachh Bharat Cess under Chapter VI (Section 119) of Finance Act 2015 vide notification No 21/2015-Service Tax and 22/2015-Service Tax Dated 06th November, 2015.
Effective Rate of SBC
Swachh Bharat Cess shall be applicable from 15th November, 2015 as Service Tax on all Taxable Services at the rate of 0.5% in addition to existing rate of 14%. Now the total Service Tax shall be charged at the rate 14.5% on all taxable services.
Applicability of SBC
Swachh Bharat Cess shall be levied on Taxable value of Services and not on the Service Tax Value: This is elaborated with the simple example mentioned below:
|
S. No |
Particulars |
Amount (INR) |
|
A |
Value of services |
100 |
|
B |
Add: Service Tax @ 14% (14% on A) |
14 |
|
C |
Add: Swachh Bharat cess @ 0.5% (0.5% on A) |
0.5 |
| Total Invoice Value [A+B+C] |
114.5 |
Exception of SBC
- Services which are fully exempted
- Services which are covered under the Negative List
Motive of SBC
As per the Central Government notification money collected from the Swachh Bharat Cess shall directly deposited to the consolidated fund of India and shall be utilised for financing and promoting Swachh Bharat Initiatives or for any other act relating to that.
Accounting Code of SBC
| Swachh Bharat Cess (Minor Head) |
Tax Collection |
Other Receipts | Penalties | Deduct Refunds |
| 0044-00-506 | 00441493 | 00441494 | 00441496 | 00441495 |
Relation with Service Tax
SBC would be levied, charged, collected and paid to the Government in addition to the service tax. All the provisions which apply to Service tax shall also be applicable to SBC.
SBC shall be charged and accounted for separately in different line items in the invoice and shall be paid under the separate accounting code.
Point of Taxation
Rule 4 of Point of Taxation (PoT) Rule 2011 shall be applicable to SBC too:
|
S. No |
Date of Applicability of SB Cess |
Invoice Raised |
Payment Received |
Service Provided |
Applicability of SB Cess |
|
1 |
15-Nov-15 |
On or Before 29th Nov (within 14 days) |
before 15th |
Before |
No |
|
2 |
15-Nov-15 |
Before 15th |
before 15th |
Before |
No |
|
3 |
15-Nov-15 |
After 15th |
After 15th |
After |
Yes |
|
4 |
15-Nov-15 |
After 29th Nov (Not within 14 days) |
before 15th |
After |
Yes |
Tax Calculation under Work Contact:
According to the Rule 2A of service tax (Determination of Value) Rules, 2006, service tax shall be calculated along with SBC on Taxable Value.
So, the effective rate would be:
- In Case of Original Work = 14.5%[14%+0.5%]*40% = 5.8%
- Other than Original Work = 14.5%[14%+0.5%]*70% = 10.15%
Tax Calculation under Restaurant Services:
According to the Rule 2A of service tax (Determination of Value) Rules, 2006, service tax shall be calculated along with SBC on Taxable Value.
- In case of Ac Restaurant Services = 14.5%[14%+0.5%]*40% = 5.8%
- In case of Outdoor Catering Services = 14.5%[14%+0.5%]*60% = 8.7%
Cenvat Credit Rules
SBC is now allowed for Cenvat Credit. Therefore, we cannot adjust the amount paid to vendors for SBC while paying monthly or quarterly Service tax to the Government. Even, we cannot pay SBC by utilizing credit or any other duty or tax too.
