New Delhi: In a bid to end confusion over retrospective applicability of new Krishi Kalyan Cess, the government has stated that the 0.5 per cent tax will not apply on services whose invoice had been issued on or before May 31.
Finance Minister Arun Jaitley had in his Budget for 2016-17 fiscal introduced the 0.5 per cent Krishi Kalyan Cess on all taxable services. Proceeds of the cess are to be used for improvement of agriculture sector and farmer welfare.
While the new cess was to come into effect from June 1, 2016, questions had been raised about its applicability on services like telephony services that are rendered in May but billed in June.
The Central Board of Excise and Customs (CBEC) in a notification said services for which invoice has been raised on or before May 31, 2016 will not attract the new cess.
"The Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services with respect to which the invoice for the service has been issued on or before the May 31, 2016, from the whole of Krishi Kalyan Cess leviable thereon," the notification said.
The new cess will apply on all taxable services including restaurant bills, travel, phone bills, In the previous Budget, Jaitley had brought in a 0.5 per cent Swacch Bharat Cess.
The two additions has led to the service tax rate rising to 15 per cent. Although charged along with service tax, KKC is to be listed separately by service providers on the invoice, as a distinct line-item and paid using a unique accounting code notified by the government.
Jaitley had pegged service tax receipts at Rs 2,16,000 crore, of which KKC will give Rs 5,000 crore. In a separate notification, CBEC said the tax will not apply on service rendered in transportation of goods to India for which invoice has been raised on or before May 31.
"The Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services by way of transportation of goods by a vessel from outside India up to the customs station in India with respect to which the invoice for the service has been issued on or before the May 31, 2016, from the whole of service tax leviable thereon," it said.
This would be subject to the condition that the import manifest or import report required to be delivered under section 30 of the the Customs Act, 1962 (52 of 1962) has been delivered on or before May 31, 2016 and the service provider or recipient produces Customs certified copy of such import manifest or import report.