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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 ..... e Government has announced 1 5th November, 2015 as the date from which the provisions of Section 1 19 would come 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is calculated. Therefore, SBC would be levied on the same taxable value as service tax. Q. 7 Whether SBC would be required to be mentioned separately in invoice? Ans. SBC 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r are otherwise not leviable to service tax under section 66B of the Finance Act, 1994. Q.12 How will the SBC be calculated for services under reverse charge mechanism? Ans. In case of reverse charge under section 68(2) of the Finance Act, 1994, the liability has been shifted from service provider to the service recipient. As per section 119 (5) of the Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made thereunder are applicable to SBC also. Thus, the reverse charge under section 68(2) of the Finance Act, 1994, is made applicable to SBC. In this context, to clarify, Government has issued Notification No. 24/2015-Service Tax dated 12th November, 2015 to provide that reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised before the service becomes taxable. i.e. prior to 15d1 November, 20 15, there is no lability of Swachh Bharat Cess. In cases where payment has been received before the service became taxable and invoice is raised within 14 days. i.e. upto 29 th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15 th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15 th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29 th Nov, 2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Q.18 Whether SBC would be applicable on services covered by Rule 6 or Service Tax Rules (i.e. air travel agent, life insurance premium, purchase and sale of foreign currency and services by lottery distributors/selling agents) Ans. Sub-rule (7D) to rule 6 has been inserted vide Notification 25/2015-Service Tax, dated 12th November, 2015 so as to provide that the person liable for paying the service tax under sub-rule (7), (7A), (7B) or (7C) of rule 6 of Service Tax Rules, shall have the option to pay SBC as determined as per the following formula:- Service Tax liability [calculated as per sub-rule (7), (7A), (7B) or (7C)] X 0.50/0/14% The option under this sub-rule once exercised, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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