Sunday, August 21, 2016

20 FAQs On Krishi Kalyan Cess – A New Levy

The Central Government has decided to levy Krishi Kalyan Cess @ 0.5% on the value of taxable services from 01/06/2016. As a result, there are bound to be questions as to how this levy will get integrated into the existing dynamic structure of the Service Tax provisions.

So, an endeavour has been made to collate most of the possible questions with regard to the KKC and answer them on the basis of the relevant Service Tax provisions. For this purpose, all the relevant notifications and circulars issued by the Central Government till date have also been taken into account.
Also Read: No Krishi Kalyan Cess On Debtors as on 13th May’ 2016

Q1) What is Krishi Kalyan Cess (KKC)?

A1) In order to finance and promote the welfare of farmers and development of agriculture, the Central Government has levied Krishi Kalyan Cess (KKC) at the rate of 0.5% on the value of taxable service.

Q2) What is the date of implementation of KKC?

A2) The Central Government has kept the date of applicability of KKC as 1stJune, 2016 under Chapter VI as per Section 161 of the Finance Act, 2016.

Q3) What would be the effective rate of KKC and service tax post KKC?

A3) KKC would be applicable at the rate of 0.5% and the effective rate of service tax post KKC would be 15% (14% Service Tax + 0.5% Swachh Bharat Cess + 0.5% Krishi Kalyan Cess).

Q4) How will the KKC be calculated?

A4) KKC will be calculated in the same way as the Service Tax and Swachh Bharat Cess is calculated. This means that the taxable value to be taken for KKC would be the same as that for Service Tax and Swachh Bharat Cess. So, KKC would be 0.5% of the value of taxable service.

Q5) Whether KKC would be required to be mentioned separately in invoice?

A5)Yes, KKC would be required to be shown as a separate line item in the invoice after Service Tax and Swachh Bharat Cess.

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