Swachh Bharat Cess - Government Issues Notifications
DDT is happy to report that the Government has reacted to public outcry and issued clarifications on the huge confusion created by Swachh Bharat Cess. TIOL has repeatedly highlighted the issues of concern to the assessees.
Tax on whole value or abated?
An effective rate of 0.5 percent of the value of taxable services was fixed by Notification No.22/2015, dated 06.11.2015. Now this notification is amended to clarify that:
1. Swachh Bharat Cess shall be leviable only on that percentage of taxable value specified in the notification No. 26/2012-Service Tax, dated 20th June, 2012. (Abatement Notification)
2. Value of taxable services for the purposes of the Swachh Bharat Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.
Notification No. , Dated:November 12, 2015
Reverse Charge Mechanism to apply to SBC
Notification No. 30/2012-Service Tax dated 20.06.2012 prescribes the extent of Service Tax payable by the service provider and any other person liable to pay the Service Tax. (Reverse Charge Mechanism).
Now a notification is issued to stipulate that this Notification No. 30/2012-Service Tax dated 20.06.2012 shall be applicable for the purposes of Swachh Bharat Cess mutatis mutandis .
Notification No. , Dated:November 12, 2015
Service Tax Rules Amended to provide for alternative rates:
As per sub-rules 7, 7A, 7B and 7C of rule 6 of the Service Tax Rules, there is an alternative rate of Service Tax for air travel agents, life insurance, foreign exchange and lottery. Now the alternative rate is fixed for Swachh Bharat Cess also for these services, which is Service Tax liability multiplied by 0.5 divided by 14. This is done by inserting a sub-rule 7D in rule 6 of the STR, 1994.
This notification comes into force from 15th November 2015.
Notification No. , Dated:November 12, 2015