Swachh Bharat Mission (SBM) :the Central Government of India under the ruling of BJP Government introduced a new Cess to be called “Swachh Bharat Cess” ,which had a major motto to make clean and green India.“Swachh Bharat Cess is not another tax its a initiative Program involving each and every citizen in making contribution to Swachh Bharat (clean India).which is effectively taking place through out the country which gear up with adding tax to all services which comes under tax
As per the provisions of the Section 119 of the Finance Act, 2015, finance minister Arun Jaitley proposed the cess at a rate of SBC @ 2% or less on all or certain services.Swachh Bharat cess will be effective from November 15, taking the service tax rate from the current 14 per cent to 14.5 per cent which adds up additional 0.5% on all services liable for service tax,The new rate of Service Tax inclusive of SBC will be 14.50%.
Swachh Bharat Cess Cenvat Credit
Swachh Bharat cess would be levied, charged, collected and paid to Government independent of service tax. This needs to be mentioned separately on the invoice.SBC is not included in the Cenvat Credit Chain.its clear that the credit of SBC cannot be availed. Further, SBC cannot be funded by opting the credits of any other duty or tax.
How Swachh Bharat Cess will be calculated?
Swachh Bharat cess will be calculated as Service tax is been calculated. SBC would be charged as the same service tax on taxable services which is calculated as [Service Tax + SBC]% would be (14% Service Tax + 0.5% SBC) X 30% = 4.35% (4.20%+0.15%) SBC is not to be calculated on Service Tax but on the taxable value of the service provided.
Example of Swachh Bharat Cess calculation –
For a service worth Rs. 100, Service Tax as mentioned above is Rs. 14 with 14% rate and Swachh Bharat cess will be Rs. 0.05 with 0.5%. So the total amount to be paid is Rs. 114.5.