The Central Government has issued the much awaited notification in relation to allowing service providers to avail and utilize Cenvat credit of Krishi Kalyan Cess (“KKC”) for payment of KKC on output services. The highlights of Notification No. 28/2016-CE (NT) dated May 26, 2016 are as under:

  • Rule 3 of Cenvat Credit Rules amended to provide that 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.
  • Cenvat credit of any duty specified in sub-rule(1) of Rule 3 of Cenvat Credit Rules shall not be utilised for payment of KKC leviable under Section 161 of the Finance Act, 2016
  • Cenvat credit in respect of KKC on taxable services leviable under Section 161 of the Finance Act, 2016 shall be utilised only towards payment of KKC on taxable services leviable under section 161 of the Finance Act, 2016.