The Budget 2016 has introduced a new cess named as Krishi Kalyan Cess, which is applicable from June 1, 2016 at the rate of 0.5% on all the taxable services. With the imposition of this cess, the new effective Service Tax would henceforth be 15%.
With the addition of KKC, all DTH, credit and debit cards, courier, healthcare, banking, professional consultancies and charges on restaurant food bills would become costlier. The purpose of initiating the Krishi Kalyan Cess is for improving the agriculture scenario.
In brief, Krishi Kalyan Cess is a tax, which the government is going to collect for some specific purpose. Hence, the collections would be there only for this specific motive and not for any other purpose. The cess is similar to the Swachh Bharat Cess, which has been levied for the cleanliness.
It is going to be charged for all the services on which the Service Tax has been levied. From 1st June onwards, the effective rate of service tax would be 15%. Service Tax would be imposed @ 14%, Swachh Bharat Cess @ 0.5%, and Krishi Kalyan Cess @ 0.5%, which sum up to a total of 15%. Before June 1, the applicable tax rate was 14.5%.
Some Prominent Facts About Krishi Kalyan Cess
1.) The tax will be collected as per the provisions of chapter VI and should be levied @ 0.5%. Total value of services that are for the purpose of financing and promoting the agricultural scenario would be considered under this.
2.) The Consolidated Fund of India is going to credit the revenues first and then they are added to the account of Central Govt. after due appropriation made by Parliament in law in this behalf. The fund would be utilized for the Krishi Kalyan Cess for the aforementioned specified purpose.
3.) In case of Krishi Kalyan Cess, the input credit amount of the cess is to be claimed against the Krishi Kalyan Cess, whereas the case of Swachh Bharat Cess doesn’t allow the input credit to be credited.
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