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TMI BlogFrequently Asked Questions (FAQs) on Swachh Bharat Cess (SBC)X X X X Extracts X X X X X X X X Extracts X X X X ..... into effect (Notification No.21/2015-Service Tax, dated 6th November, 2015 refers). Simultaneously, Government has also notified levy of Swachh Bharat Cess at the rate of 0.5% on all taxable services. Effectively, the rate of SBC would be 0.5% and new rate of Service Tax plus SBC would be 14.5%. As such SBC translates into a tax of 50 paisa only on every one hundred rupees worth of taxable services. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives. The Frequently Asked Questions (FAQs) on Swachh Bharat Cess (SBC) are as under:- Q.1 What is Swachh Bharat Cess (SBC)? Ans. It is a Cess which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2015,called Swachh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax. This needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code. SBC may be charged separately after service tax as a different line item in invoice. It can be accounted and treated similarly to Education Cesses. Q. 8 Whether separate accounting code will be there for Swachh Bharat Cess? Ans. Yes, for payment of Swachh Bharat Cess, a separate accounting code has been notified vide Circular No. 188/7/2015-ST dated 16th November, 2015. These are as follows:- Swachh Bharat cess (Minor Head) Tax Collection Other Receipts Penalties Deduct Refunds 0044-00-506 00441493 00441494 00441496 00441495 Q. 9 What would be effective rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued Notification No. 24/2015-Service Tax dated 12th November, 2015 to provide that reverse charge under Notification No.30/2012-Service Tax dated 20th June, 2012 shall be applicable for the purpose of levy of Swachh Bharat Cess mutatis mutandis. Q.13 How will SBC be calculated for services where abatement is allowed? Ans. Taxable services, on which service tax is leviable on a certain percentage of value of taxable service, will attract SBC 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 SBC also in the same manner as it applies for service tax. For example, in the case of GTA, [Service Tax + SBC would be (14% Service Tax + 0.5% SBC) X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Q. 16 How would the tax (Service Tax and SBC) be calculated on services covered under Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006. ? Ans. The tax (Service Tax and SBC) on services covered by Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006, would be computed by multiplying the value determined in accordance with these respective rules with [14% + 0.5%]. Therefore, effective rate of Service Tax plus SBC in case of original works and other than original works under the works contract service would be 5.8% [(14% + 0.5%)*40%] and 10.15% [(14% + 0.5%)*70%] respectively. Similar, would be the tax treatment for restaurant and outdoor catering services. Q.17 How would the tax be calculated on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year under any circumstances. Q. 19 How would liability be determined in case of reverse charge services where services have been received prior to 15.11.2015 but consideration paid post 15.11.2015? Ans. In respect of reverse charge mechanism, SBC liability is determined in accordance with Rule 7 of Point of Taxation Rules, as per which: point of taxation is the date on which consideration is paid to the service provider. Thus, SBC liability in such case will be 0.5% X Value of taxable service. Q.20 Does a person providing both exempted and taxable service and reversing credit @ 7% of value of exempted service under Rule 6 of Cenvat Credit Rules, need to reverse the SBC also. Ans. As SBC is not integrated in the Cenvat Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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