Skip to main content

Services Exempted from Tax Won't Attract Swachh Cess

By
The new rate of service tax plus Swachh Bharat cess will be 14.5%.
The recently imposed `Swachh Bharat' cess will not be levied on services that are exempted from tax or are in the negative list, the Central Board of Excise and Customs has said.
The CBEC has issued clarifications in form of frequently asked questions to clear the air about the cess, which was announced in this year's Budget but levied only from November 15.
“It is also proposed to have an enabling provision to levy `Swachh Bharat' cess at a rate of 2% or less on all or certain services if the need arises. This cess will be effective from a date to be notified,“ finance minister Arun Jaitley had said in his budget speech, adding that “resources generated from this cess will be utilised for financing and promoting initiatives towards Swachh Bharat“.
Although the government has Parliament's nod to levy up to 2% as Swachh Bharat cess, it notified the rate at 0.5%. An official said the tax was notified over five months after Parliament gave its approval in order to give adequate time to the industry to prepare, and the rate was kept moderate keeping in view the burden on the common man. The government notified Swachh Bharat cess on all taxable services on November 6, to be effective from November 15. Effectively , the new rate of service tax plus Swachh Bharat cess would be 14.5%. As such the cess translates into a tax of 50 paisa on every one hundred rupees worth of taxable services. The proceeds from this cess will be exclusively used for the government's `Swachh Bharat' initiatives.
There is also a view in the government that this cess also prepares the ground for a sudden jump in service tax rate under the goods and services tax regime. The GST will bring down the overall incidence of taxation but the tax rate on services will in evitably go up. This cess would be levied, charged, collected and paid to the government independent of service tax. This needs to be charged separately on the invoice, accounted for separately in the books of account, and paid separately under a separate ac counting code, which will be notified shortly. It will have to be charged separately after service tax as a different line item in invoice and accounted and treated similarly to education cess.
For example, the effective cess in respect of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, having the facility of airconditioning or central heating in any part of the establishment, will be 0.5% of 40% of the total amount, which is, 0.2% of the total amount.
The Economic Times, New Delhi, 20th Nov. 2015

Comments

Post a Comment

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

By
  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6
Post a Comment
Read more

Jaitley plans to cut MSME tax rate to 25%

By
Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem
1 comment
Read more

Don't forget to verify your income tax return in August: Here's the process

By
  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s
Post a Comment
Read more