Arun Jaitley while announcing the Budget 2016 has introduced a new cess which would be levied @ 0.5% on the value of all taxable services. This would be levied @ 0.5% and would be levied over and the above the Service Tax and the Swachh Bharat Cess.
The Krishi Kalyan Cess has been levied for the purpose of financing and promoting initiatives to improve agriculture and would be applicable from 1st June 2016.
What is Krishi Kalyan Cess
A Cess is a Tax that is collected by the government to be used for a specific purpose. The collections from levy of cess can be used only for the purpose for which it has been collected and not for any other purpose.
Just like Swachh Bharat Cess has been levied for cleanliness, similarly Krishi Kalyan Cess has been introduced for improving agricultural facilities.
This Cess won’t be levied on your Income but would be levied on all Services on which Service Tax levied. Therefore, from 1st June, the effective rate of service tax would be 15% i.e.
| Particulars | Amount |
| Service Tax | 14% |
| Swachh Bharat Cess | 0.5% |
| Krishi Kalyan Cess | 0.5% |
| Total | 15% |
This new Krishi Kalyan Cess would be applicable on all your Payments for Services like like Telephone Bill, Internet Bill, Rent Payment, Restaurant Bill Payment, Under Construction Property, Air Travel Agent, Digital Advertisements, etc. It is to be noted that the Service Provider cannot simply mention 15% Tax on the Invoice and he would be required to mention the break up of the Invoice.
Krishi Kalyan Cess for Services provided before 1st June
Krishi Kalyan Cess is applicable from 1st June 2016. In cases where the services have been provided after 1st June and the payment received after 1st June – Krishi Kalyan Tax would be applicable in all such cases.
However, in some cases – it may be applicable for services provided before 1st June as well. The following chart explains the cases on which the Krishi Kalyan Cess would be applicable and the cases in which the Krishi Kalyan Cess wont be applicable
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