In Union Budget 2015, presented earlier this year, it had been proposed that a Swachh Bharat Cess (Cess) would be imposed on all or any taxable services to finance and promote the “Clean India” initiative announced by the Central Government. The “Clean India” initiative was announced by the Central Government to commemorate the 150th birth anniversary of Mahatma Gandhi in 2019.

Notification levying Cess

Through Notification Nos. 21/2015-ST & 22/2015-ST, both dated 6 November 2015, the Central Government has imposed the Cess @ 0.5% on the taxable value of all taxable services with effect from 15 November 2015.

Comment

The present rate of service tax is 14% on the taxable value. Effective 15 November 2015, the rate of service tax inclusive of such Cess would be 14.5%. Principles laid down for determining the Point of Taxation and consequently, the rate of tax would equally apply to this imposition.

As per the budget announcements, it was expected that the Cess would be levied only on select services. However, the same has been imposed on all taxable services.

The Central Government has not notified CENVAT Credit eligibility of such Cess under the CENVAT Credit Rules, 2004. Therefore, as of now, no CENVAT Credit can be availed for the Cess paid.