Swachh Bharat Cess
Swachh Bharat Cess
Swachh Bharat was introduced in the Hon’ble Finance Ministers 2015-16 speech as a means to regenerate India through the Swachh Bharat Abhiyan. Swachh Bharat Abhiyan is a national campaign by the Government of India for clearing the streets, roads and infrastructure of India, to create a “Clean India” wherein cleanliness and hygiene are improved across India. Hence, in the Budget 2015-16, a enabling provision to levy Swachh Bharat Cess at a rate of 2% or less on all or certain services was approved.
Following the 2015-16 budget, the Government issued Service Tax Notification No.21/2015 announcing that the Swachh Bharat Cess would come into force from 15th November, 2015 at the rate of 0.5% on all taxable services. Based on that notification, Swachh Bharat Cess has been implemented in India since November 15th, 2015.
Swachh Bharat Cess will not be liable for cases where payment has been received and invoice is raised before 15th November, 2015. In cases where payment has been received before the service became taxable and invoice is raised upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015.
Effective rate of service tax plus Swachh Bharat Cess is 14.5% [14% + 0.5%].
Invoice Format & Accounting
Swachh Bharat Cess would be levied, charged, collected and paid to Government independent of service tax. Hence, it needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code. The accounting codes for Swachh Bharat Cess are:
- Swachh Bharat Cess (Minor Head) – 0044-00-506
- Tax Collection -00441493
- Other Receipts – 00441494
- Penalties – 00441496
- Deduct Refunds – 00441495
Swachh Bharat Cess Rate
Though the Government has the ability to levy a Swachh Bharat Cess of upto 2%, only 0.5% has been implemented by the Government. Swachh Bharat Cess will be applicable at 0.5% on the value of taxable services. All servicex for which service tax is applicable are liable to pay Swachh Bharat Cess. Only those services fully exempt from service tax under any notification are not made liable to Swachh Bharat Cess.
CENVAT Credit for Swachh Bharat Cess
Swachh Bharat Cess is not integrated in the Cenvat Credit Chain. Hence, credit of Swachh Bharat Cess cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.
Swachh Bharat Cess for Restaurants
Swachh Bharat Cess would be calculated for restaurants 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 air–conditioning or central air-heating in any part of the establishment. Service tax would be 0.5% of 40% of the total amount, i.e, 0.2% of the total amount. The cumulative service tax and Swachh Bharat Cess liability would be [14% ST + 0.5% SBC] of 40% of the total amount, i.e., 5.8% of the total amount charged.