GUEST COLUMN
KRISHI KALYAN CESS (KKC) APPLICABLE W.E.F 01.06.2016
By Kamal Gupta, B.Com (H), ACA
1. Chapter VI of Finance Act, 2016 levy Krishi Kalyan Cess (KKC) w.e.f 01.06.2016 which shall be levied and collected as service tax on all or any of the taxable services at the rate of 0.5% of the value of such service for the purpose of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.
2. The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Krishi Kalyan Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under the said Chapter or the rules made thereunder, as the case may be. Therefore, Krishi Kalyan Cess is not leviable on services which are fully exempt from service tax or those covered under the negative list of services. KKC provision will work in the same manner as service tax provision works. For e.g.:
a) There will be exemption from KKC also if there is exemption from service tax. For e.g. services provided to SEZ unit is exempted from service tax under Notification no.12/2013-ST, therefore, KKC will also be exempted on service provided to SEZ unit. Similarly, if there will be any exemption from service tax under any Notification, than, KKC will also be exempted.
b) In case of export of service, service tax does not levy, therefore, KKC will also not levy on export of services.
3. Krishi Kalyan Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.
4. KKC is levied w.e.f 01.06.2016.
5. KKC is also applicable/leviable/payable on the services on which service tax is required to be paid under reverse charge mechanism
6. KKC should be charged separately and shown as different line item in invoice.
7. The Chart of effective rate of service tax, SBC & KKC w.e.f 01.06.2016 is given as below:
a) Effective rate of Service tax, SBC and KKC w.e.f 01.06.2016 on the services other than those falling reverse charge mechanism
|
S.No. |
Service |
Service Tax (%) |
SBC (%) |
KKC(%) |
Total (%) |
|
1. |
All taxable services other than mentioned below |
14 |
0.5 |
0.5 |
15.00 |
|
2. |
Services in relation to financial leasing including hire purchase |
1.4 |
0.05 |
0.05 |
1.50 |
|
3. |
a) Transport of goods in containers by rail by any person other than Indian Railways b) Transport of goods by rail [other than specified by (a) above] |
5.6
4.2
|
0.2
0.15 |
0.2
0.15 |
6.00
4.50 |
|
4. |
Transport of passengers, with or without accompanied belongings by rail |
4.2 |
0.15 |
0.15 |
4.50 |
|
5. |
Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises |
9.8 |
0.35 |
0.35 |
10.50 |
|
6. |
Transport of passengers by air, with or without accompanied belongings in (i) economy class
(ii) other than economy class |
5.6
8.4
|
0.2
0.3 |
0.2
0.3 |
6.00
9.00 |
|
7. |
Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. |
8.4 |
0.3 |
0.3 |
9.00 |
|
8. |
Services of goods transport agency in relation to transport of goods other than used household goods |
4.2 |
0.15 |
0.15 |
4.50 |
|
9. |
Services of goods transport agency in relation to transport of used household goods |
5.6
|
0.2
|
0.2
|
6.00
|
|
10. |
Services provided by a foreman of chit fund in relation to chit |
9.8 |
0.35 |
0.35 |
10.50 |
|
11. |
Renting of motorcab |
5.6
|
0.2
|
0.2
|
6.00
|
|
12. |
Transport of passengers with or without accompanied belongings, by- a) a contract carriage other than motorcab b) a radio taxi c) a stage carriage |
5.6
|
0.2
|
0.2
|
6.00
|
|
13. |
Transport of goods in a vessel |
4.2 |
0.15 |
0.15 |
4.50 |
|
14. |
Service by a tour operator in relation to: a) a tour, only for the purpose of arranging or booking accommodation for any person
b) tours other than specified in (i) |
1.4
4.2 |
0.05
0.15 |
0.05
0.15 |
1.50
4.50 |
|
15. |
Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority,
|
4.2 |
0.15 |
0.15
|
4.50
|
|
16. |
Works Contract Services in respect of (a) All new constructions, all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable, erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise
(b) maintenance or repair or reconditioning or restoration or servicing of any goods or maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property
|
5.6
9.8 |
0.2
0.35 |
0.2
0.35 |
6.00
10.50 |
|
17. |
Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant |
5.6 |
0.2 |
0.2 |
6.00 |
|
18. |
Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of such outdoor catering |
8.4 |
0.3 |
0.3 |
9.00 |
b) Effective rate of Service tax, SBC and KKC w.e.f 01.06.2016 on the services falling under reverse charge mechanism
|
S.NO. |
Service |
Service Tax (%) |
SBC (%) |
KKC(%) |
Total (%) |
|
1. |
Services provided or agreed to be provided by an insurance agent to any person carrying on insurance business |
14 |
0.5 |
0.5 |
15.00 |
|
2. |
Services provided or agreed to be provided by a recovery agent to a banking company or a financial institution or a non-banking financial company |
14 |
0.5 |
0.5 |
15.00 |
|
3. |
Services provided or agreed to be provided by a selling or marketing agent of lottery tickets in relation to a lottery in any manner to a lottery distributor or selling agent of the State Government under the provisions of the Lottery (Regulations) Act, 1998 (17 of 1998) |
14 |
0.5 |
0.5 |
15.00 |
|
4. |
Services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road |
4.2 |
0.15 |
0.15 |
4.50 |
|
5. |
Services provided or agreed to be provided by way of sponsorship |
14 |
0.5 |
0.5 |
15.00 |
|
6. |
Services provided or agreed to be provided by an arbitral tribunal |
14 |
0.5 |
0.5 |
15.00 |
|
7. |
Services provided or agreed to be provided by a firm of advocates or an individual advocate other than a senior advocate by way of legal services |
14 |
0.5 |
0.5 |
15.00 |
|
8. |
Services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate |
14 |
0.5 |
0.5 |
15.00 |
|
9. |
Services provided by Government or local authority to an business entity business entity located in the taxable territory other than following services: (a) Renting of immovable property (b) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government; (c) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (d) transport of goods or passengers
[Please note that apart from four services, Notification no. 22/2016-ST dated 13.04.2016 exempted various services provided by the government or local authority on which reverse charge will not be applicable. Further there are also doubts on the various activities of the government that whether service tax is applicable or not, hence payment of service tax on reverse charge basis against activities performed by government or local authority should be made after analysis of various provisions of law.] |
14 |
0.5 |
0.5 |
15.00 |
|
10. |
a) Services provided or agreed to be provided by Individual, HUF, Firm, AOP by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business
b) Services provided or agreed to be provided by Individual, HUF, Firm, AOP by way of renting of a motor vehicle designed to carry passengers on non-abated value to any person who is not engaged in the similar line of business |
5.6
7 |
0.2
0.25 |
0.2
0.25 |
6.00
7.50 |
|
11. |
Services provided or agreed to be provided by way of supply of manpower for any purpose or security services by the Individual, HUF, Firm, AOP |
14 |
0.5 |
0.5 |
15.00 |
|
12. |
Services provided or agreed to be provided in service portion in execution of works contract provided by the Individual, HUF, Firm, AOP
(a) All new constructions, all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable, erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise
(b) maintenance or repair or reconditioning or restoration or servicing of any goods or maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property |
2.8
4.9
|
0.1
0.175
|
0.1
0.175
|
3.00
5.25
|
|
13. |
Taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory |
14 |
0.5 |
0.5 |
15.00 |
|
14. |
Service provided or agreed to be provided by a person involving an aggregator in any manner |
14 |
0.5 |
0.5 |
15.00 |
8. Point of Taxation/Liability for payment of KKC
The following table shows matrix for payment of KKC under various situations
|
S.No |
Particular |
Date of receipt (including advance) /payment |
Date of raise of invoice |
Liability of KKC |
|
1. |
For Liability as Service provider |
Before 01.06.2016 |
Before 01.06.2016 |
No |
|
Before 01.06.2016 |
Upto 15.06.2016 |
No |
||
|
Before 01.06.2016 |
After 15.06.2016 |
Yes |
||
|
After 01.06.2016 |
After 01.06.2016 |
Yes |
||
|
2. |
For liability as Service Recipient
a) when service has been provided before 01.06.2016 by the vendor |
After 01.06.2016 |
Before 01.06.2016 |
No |
|
Before 01.06.2016 |
After 01.06.2016 |
No |
||
|
After 01.06.2016 |
After 01.06.2016 |
Yes |
||
|
|
b) when service has been provided after 01.06.2016 by the vendor |
Before 01.06.2016 |
After 01.06.2016 |
No |
|
After 01.06.2016 |
After 01.06.2016 |
Yes |
||
|
After 01.06.2016 |
Before 01.06.2016 |
Yes |
9. CENVAT CREDIT OF KKC:
CENVAT Credit Rules till date has not been amended to
allow CENVAT CREDIT OF KKC paid on input services. But it is hopeful that since
Finance Act, 2016 has received the assent of the President w.e.f
14.05.2016, government may appropriate notification for amendment of CENVAT
Credit Rules regarding KKC and allowed CENVAT CREDIT of KKC. However, it is
being stated that CENVAT Credit of KKC will only be allowed for payment of KKC
on output taxable services. Therefore, it needs to wait for appropriate
Notification for amendment of CENVAT Credit Rules regarding availment
of CENVAT CREDIT of KKC than only true picture will come to surface and
accordingly payment of KKC on output taxable service will be made and separate
accounting codes in respect of KKC will be created in the system.
10. Points require immediate action before 01.06.2016
Disclaimer: Views expressed are strictly personal. The content of this document are solely for informational purpose and it doesn’t constitute professional advice or recommendation.