Disease of Doing Business - Government Strikes Again - Service Tax now at 14.5%
THERE shall be collected as Service Tax a Swachh Bharat Cess @ 0.5% of the value of taxable services from next Sunday. Yes, from Sunday!
The Government preaches day in day out that it wants to improve the ‘ease of doing business' and the CBEC has declared 2015 as the "Year of the Tax-Payer Services", but what we find is a gross insult (to say the least) to the unfortunate taxpayer.
Maybe we misunderstood the message of the Government. When they speak of ‘ease of doing business', what they mean is not ease of doing business for the businessmen, it is ease of doing business for the government babus! When the CBEC goes to town with the "Year of the Tax-Payer Services", what it means is tax-payers' service to the Board. Whoever chooses to do business in India are doomed to make it easy for the government and serve the babudom without expecting any facilitation.
As per Section 119(2) of the Finance Act 2015,
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.
As per Section 119(1) of the Finance Act 2015, this is to come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. And now, the government has notified 15th November as the DATE.
Why 15th November? The Finance Act 2015 came into effect from 14th May 2015 and they waited for six months and suddenly thrust this tax on this nation. Why couldn't they wait for another 15 days and make it effective from 1st December? Will heavens fall in 15 days? Is the Board aware how much difficulty this is going to cause? In cases where Service Tax has already been collected for the month of November, now Swachh Bharat Cess (SBC) has to be collected separately for 15 days of November. Assessees using electronic systems will have to make changes in their programmes to collect SBC from 15th November and they have just a week to do that.
As such there are several doubts which the Board refuses to clarify.
1. There is absolute confusion on determining the date for payment of tax like - providing the service, issuing invoice, receiving payment… Which Rule of the Point of Taxation Rules covers the situation…
2. Board has not bothered to clarify whether SBC is cenvattable
3. Whether SBC can be paid from CENVAT account.
These questions need to be clarified by amending the rules, issuing instructions etc. Couldn't the Government wait for fifteen days, issue the necessary clarifications, educate the assessees and then impose the tax? But then the taxpayers' convenience has never been the concern of the bureaucracy; they sit in their comfortable rooms and cause misery with absolutely no stakes and responsibilities, but only periodical bounties like DA, increments, promotions and the mandatory decennial manna in the form of Pay Commissions - all for making life miserable for the citizens, who are actually their masters, but who are treated worse than servants.
With this kind of bureaucracy, the ruling party doesn't need an opposition party in Parliament to discredit it and eventually dislodge it.
It is scaring to even imagine that it is this very babudom which is going to unleash GST on this nation.
Anyway get prepared to pay 0.5% SBC from 15th November 2015 and a little advice to those who would like to challenge this levy in the High Courts - please don't; none of these challenges succeeded earlier.
The Government says, this will translate into a tax of 50 paisa only on every one hundred rupees worth of taxable services, but it is in addition to the 14 rupees already payable. If the Government goes on collecting 50 paisa more on its several activities, it may become another 14 rupees soon.
Please also see our articles on the issue:
1. Swachh Bharat Cess - An impatient & hurried imposition
2. Swachh Bharat Cess - Not so clean
3. Swachh provisions for Swachh Bharat Cess needed
Notification No. , Dated: November 6, 2015 & Notification No. , Dated: November 6, 2015