Today we will discuss on Applicability of Krishi kalyan Cess on Service tax whether it will be applicable on negative list , reverse charge mechanism service etc. Also we will discuss on the payment procedure of Krishi kalyan Cess on Service tax
Meaning of Krishi kalyan Cess (KKC)?
It is a Cess which shall be levied and collected in accordance with the provision of Chapter VI of the Finance Act,2015 called Krishi kalyan Cess ,as Service Tax on all Taxable Services at the rate of 0.05% of the value of Taxable Services.
From Which Date KKC is applicable?
KKC is applicable from 1st day of June, 2016
New rate of service tax after applicability of KKC?
The new rate of service tax will increase from present 14.5% to 15% from 1st day of June, 2016.
Is Krishi kalyan Cess applicable on Services mentioned in “Negative List” and “Mega Exemption List”.
No. Krishi kalyan Cess is not applicable on Services mentioned in “Negative List” and “Mega Exemption List” as per Notification No. 22/2015 that KKC would not be applicable on services exempted from levy of service tax.
In case of services covered by Abatement, what would be effective rate of tax?
Taxable Services, on which service tax is leviable on a certain percentage of value of taxable service, will attract KKC on the same percentage of value as provided in the Notification No.26/2012-Service Tax dated 20th June, 2012. So, this notification would apply for KKC also in the same manner as it applies for Service Tax.
For instance in case of GTA Service, it would be 15%*30%= 4.50%.
Is Krishi kalyan Cess applicable on Reverse Charge Mechanism (RCM) service?
Yes. KKC would be applicable on all taxable services. Hence, KKC is payable along with service tax on the services availed and covered under reverse charge mechanism.
How Krishi kalyan Cess apply on Works Contract Service
The value of services would be calculated as per Rule 2A of Service Tax (Determination of Value) Rules, 2006. Tax needs to be applied on the value so arrived at the rate of 15%. Effective rate of tax in case of original works and other than original works would be 6% (15%*40%) and 10.5% (15%*70%) respectively.
What would be the liability in case of Reverse Charge Services, where services have been received prior to 1.6.2016, but consideration paid post 1.6.2016?
In case of reverse charge services, point of taxation as per Rule 7 of Point of Taxation Rules, would be the date on which consideration is paid to service provider. Hence, in such case Krishi kalyan Cess would be payable.
What would be rate of tax where services are provided before and after imposition of KKC?
Imposition will be as per point of taxation rule. Click here to find the imposition – SBC on service tax
Whether KKC would be required to be mentioned separately in Invoice?
KKC would be levied, charged, collected and paid to Government independent of Service Tax. This needs to be charged separately on the invoice, accounted for separately in the books of accounts and paid separately under separate accounting code.S BC may be charged separately after Service tax as a different line item in Invoice.
Availability of Cenvat Credit of Krishi kalyan Cess
Whether Cenvat credit of payment of KKC is permissible under Cenvat Credit Rules, 2004?
Yes. cenvat credit of KKC is available only against input KKC. you can also claim the refund of KKC in service tax.
Whether Krishi kalyan Cess needs to be collected and paid separately from service tax ?
KKC would be levied, charged, collected and paid to government independent of service tax. This needs to be charged separately on the invoice, needs to be accounted separately in the books of account and needs to be paid separately under separate accounting code as notified separately.
Whether separate accounting code to be mentioned in Challans while making payment of Krishi kalyan Cess.
Yes. For payment of KKC , a separate accounting code would be notified shortly.