Cess Ek; Stress Anek! Swachh Bharat Cess - FAQ Issued – Why should Board complicate matters?
THE Government wanted to collect a 0.5% cess as Service Tax to fund its clean up programmes and had the approval of Parliament to collect up to 2% on all or some services. It entrusted the job to the CBEC and that started a series of Greek drama resulting in utter confusion.
The Government could have simply enhanced the Service Tax rate to 12.5% and be done away with(with credit of course). That would have been more of 'ease of doing business' and less of hassles to the hapless assessee. But that is not the Board's understanding of ease.
See what they unleashed on an unsuspecting nation.
1. First they announced the launch of Swachh Bharat Cess (the darned SBC ) from the middle of the month - 15th November. This singular act causes maximum misery.
2. Then they issued three confusing notifications, mostly to clarify that the existing provisions are adequate.
3. They issued a Press Release through PIB without even recognising the existence of the notifications.
4. And now they have issued a FAQ.
FAQ - All the questions you wanted to ask a day before SBC came into force :
As per the Board's FAQ released on Saturday
1. Show SBC separately in the Invoice: SBC will have to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code 00441493. SBC may be charged separately after service tax as a different line item in invoice. If you have invoices, get them changed to include SBC. If you use electronic invoices, make changes in your software.
2. No CENVAT Credit of SBC: On Friday, DDT reported, "It is heard that the view in the Government is that there would be no CENVAT Credit of Swachh Bharat Cess, because the tax is a low 0.5% and the Government wants the whole of it, cascading effect and GST notwithstanding". Board has now confirmed this. The FAQ clarifies, "SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax". Is it not against the basic structure of GST and even CENVAT that the chain of credit flow should not be broken? Have they forgotten the concept of 'cascading effect of taxation"?
Is it really worth the trouble to trouble your assessees so much just to collect an additional tax of 0.5%? Now, the cost of compliance will be more than the tax collected and the amount of inconvenience caused is humungous. In any case, the entire collection of SBC is going into the Consolidated Fund of India and there is no separate accounting there. They are not going to create a fund into which the SBC is going to be transferred. Then why do they need separate accounts, payment, invoice etc by the assessee? At the end of the year, why can't they simply calculate the amount collected as SBC and use that money, instead of making life miserable for the assessees? How much time and money are you going to waste on this SBC?
And why rush in with the Cess in the middle of the month? The Return has columns for the month, which have to be split now for November. Is it all not additional unproductive work?
Is this what you call ‘ease of doing business' and is this what the taxpayer should expect in the ‘year of taxpayer services'?
The FAQ released by the Board.
We also bring you today a couple of articles on the issue. Please see Swachh Bharat Cess - FAQ adds to confusion And SBC clarification - A goof up