The 0.5 per cent cess will translate into a tax of 50 paisa only on every one hundred rupees worth of taxable services. “The proceeds from this cess will be used for financing and promoting Swachh Bharat initiatives”, the ministry said in a statement. Experts in India Inc say that changing billing system in the middle of the month, especially in festive season, will prove to be hard.
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However, the service tax will not be applicable for tickets issued before November 15. Even telecom operators voiced the same concern and asked for a delay.
Federation of Indian Chambers of Commerce & Industry (Ficci) has sent a letter to Revenue Secretary Hasmukh Adhia which stated that the eight day’s notice was too short and that the cess should be implemented only in January.
“Service tax of 14 per cent and Swachh Bharat cess of 0.5 per cent are chargeable on 30 per cent total passenger fare equivalent on 30 per cent of total passenger fare equivalent to 4.35 per cent of the total fare on first class and all AC fares”, the circular said. Option has been provided for levy of Swachh Bharat Cess also at alternative rates in respect of the above mentioned services. Swachh Bharat Cess would be calculated on abated value or value arrived at under the Service Tax (Determination of Value) Rules, 2006, as the case may be. On the issue of point of taxation, the statement said norms laid down in Rule 5 would apply.
The government today clarified that the recently notified 0.5 per cent Swachh Bharat cess will become effective from November 15, but it will not be applicable if payment is made before the effective date and invoice raised by November 29.
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The Centre had proposed to raise service tax from 12.36 per cent (including education cess) to 14 percent from June 1.
