Levy of Krishi Kalyan Cess - Service Tax - TRADE NOTICE NO.02/2016/CE

GOVERNMENT OF INDIA OFFICE OF THE COMMISSIONER CENTRAL EXCISE SERVICE TAX, GUWAHATI SETHI TRUST BUILDING, 5 th FLOOR, G.S. ROAD, BHANGAGARH GUWAHATI - 781 005 C. No. IV(16)74/Hqrs(T)/TN/Ghy/2014/4462-91 Dated: 08.06.2016. TRADE NOTICE NO.02/2016/CE Sub: Levy of Krishi Kalyan Cess It is for information for Trade and all concerned that a Cess, to be called the Krishi Kalyan Cess, has now been levied as service tax on all or any of the taxable services at the rate of 0.5 per cent. on the value of such services, vide Chapter-VI (Section-161) of the Finance Act 2016. The said Chapter-VI of the Finance Act, 2016 is reproduced below:- CHAPTER VI KRISHI KALYAN CESS 161. (1) This Chapter shall come into force on the 1st day of June, 2016. (2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Krishi Kalyan Cess, as service tax on allor any of the taxable services at the rate of 0.5 per cent. on the value of suchservices for the purposes of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto. (3) The 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) The proceeds of the Krishi Kalyan Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Krishi Kalyan Cess for such purposes specified in sub-section (2), as it may consider necessary. (5) 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. 2. The procedural aspect for the new levy; as has been notified by Central Board of Excise Customs, New Delhi, are summarized below for the facility of the Trade. These, however, shall not have any reference value and for legal authority on the issues discussed, the respective Notification/Circular shall have to be referred to. 3. Exemption from the Levy and Valuation: The CBEC vide Notification No.28/2016-Service Tax dated 26.05.2016 has exempted such taxable services from whole ofKrishi Kalyan Cess leviable thereon which are either exempt from the whole of service tax by a notification or special order issued under sub-section (1) or as the case may be under sub-section (2) of section 93 ofthe Finance Act, 1994 or otherwise not leviable to service tax under section 66B of the Finance Act, 1994: Provided that Krishi Kalyan Cess shall be leviable only on that percentage of taxable value which is specified in column (3) for the specified taxable services in column (2) of the Table in the notification No.26/2012-Service Tax, dated 20th June, 2012, published in the Gazette of India, Extraordinary, Part Il, Section 3, sub-section (i) vide number G.S.R. 468 (E), dated the 20th June, 2012. The CBEC vide the said Notification has also clarified that value of taxable services for the purposes of the Krishi Kalyan Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006. The above takes effect from 01.6.2016. For details, the said Notification No.28/2016-Service Tax dated 26.05.2016 may be referred to. 4. Accounting Head for deposit of the Cess : The CBEC vide Circular No. 194/04/2016-ST dated 26.05.2016 has communicated that accounting codes have been allotted by the Office of the Controller General of Accounts for the new Minor Head 507-Krishi Kalyan Cess and new Sub-heads as under: Krishi Kalyan Cess (Minor Head) Tax Collection Other Receipts (Interest) Deduct Refunds Penalties 0044-00-507 00441509 00441510 00441511 00441512 For details, the said Circular No. 194/04/2016-ST dated 26.05.2016 may be referred to 5. CENQAT Credit of the Cess and other related amendments : The CBEC vide Notification No.28/2016-Central Excise (N.T.) dated 26.05.2016 has made procedural amendments in CENVAT Credit Rules 2004 w.e.f.01.6.2016 in connection with this new levy. The main amendments are as follows: (a) A provider of output service shall be allowed to take CENVAT credit of the Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016); (b) Cenvat credit of any duty specified in sub-rule (1) of Rule-3 of CENVAT Credit Rules shall not be utilised for payment of KrishiKalyan Cess leviable under section 161 of the Finance Act, 2016 (28 of 2016) (c) Cenvat credit in respect of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016) shall be utilised only towards payment of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016) For details, the said Notification No.28/2016-Central Excise (N.T.) dated26.05.2016 may be referred to. 6. Payment of Krishi Kalyan Cess under reverse charge mechanism : The CBEC vide Notification No.27/2016-Service Tax dated 26.05.2016, has notified that w.e.f.01.6.2016, wherever reverse charge mechanism is applicable in terms of Notification No.30/2012-ST dated 20.06.2012, the same (reverse charge) shall be applicable mutatis mutandis for the purpose of Krishi Kalyan Cess. 7. Composite rate: The CBEC vide Notification No.31/2016-Service Tax dated 26.05.2016 has, inter-alia, provided that w.e.f. 01.06.2016, The person liable for paying the service tax under sub-rule (7), (7A), (7B) or (7C) of rule 6, shall have the option to pay such amount as determined by multiplying total service tax liability calculated under sub-rule (7), (7A), (7B) or (7C) of rule 6 by effective rate of Krishi Kalyan Cess and dividing the product by rate of service tax specified in section 66B of the Finance Act, 1994, during any calendar month or quarter, as the case may be, towards the discharge of his liability for Krishi Kalyan Cess instead of paying Krishi Kalyan Cess at the rate specified in sub-section (2) of section 161 of the Finance Act, 2016 (28 of 2016) and the option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances. For full details, the said Notification No.31/2016-Service Tax dated 26.05.2016 may be referred to. 8. Rebate of Krishi Kalyan Cess : The CBEC vide Notification No.29/2016Service Tax dated 26.05.2016 has made provisions for allowing rebate of Service Tax used in providing taxable services which are exported. This comes into effect from 01.04.2016. For full details, the said Notification No.29/2016-Service Tax dated 26.05.2016 maybe referred to 9. Refund of Krishi Kalyan Cess for developer of SEZ or a unit in SEZ: Notification No.30/2016-Service Tax dated 26.05.2016 may be referred to. 10. All the Trade Associations/Chamber of Commerce/Members of RAC are requested to bring the contents of this Trade Notice to the notice of their member constituents. sd/- (Viney Kumar Paul) Commissioner