Krishi Kalyan Cess w.e.f. 01/06/2016
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As you are aware that the Finance Act, 2016 has increased the service tax rate to include a new cess, namely Krishi Kalyan Cess, which is applicable w.e.f. 01/06/2016. The effective rate of service tax for all new services provided after 01/06/2016 shall be as below:
Service Tax - 14.00%
Swachh Bharat Cess (SB Cess) - 0.50%
Krishi Kalyan Cess (KKC) - 0.50%
Effective Service tax Rate - 15.00%
The bifurcation of all the three elements as shown above, will have to be clearly shown in the invoice. Further, CENVAT credit, wherever applicable, shall be allowed for Service tax and KKC, but not for SB Cess.
Treatment on invoices outstanding as on 31/05/2016.
The following shall be the treatment of KKC on the invoices outstanding as on 31/05/2016;
Case1: Service is provided before 1st June, Invoice is raised and payment received before 1st June – KKC not applicable
Case2: Service is provided before 1st June, Invoice is raised after 1st June, but payment received before 1st June – KKC not applicable
It is to be noted here that if the invoice is not raised within 14 days from date of receipt of payment , KKC would be applicable.
Case 3: Service is provided before 1st June, Invoice is raised before 1st June but payment is received after 1st June – KKC applicable
Therefore in all cases where invoice has been issued before 1st June, and the payment has not been made, it is advisable to make the payment before 31/05/2016 to avoid KKC of 0.5%.
Case 4: Service is provided before 1st June, Invoice is raised and payment received after 1st June – KKC applicable
Kindly take note of the above mentioned amendments and make the necessary changes.
Service Tax - 14.00%
Swachh Bharat Cess (SB Cess) - 0.50%
Krishi Kalyan Cess (KKC) - 0.50%
Effective Service tax Rate - 15.00%
The bifurcation of all the three elements as shown above, will have to be clearly shown in the invoice. Further, CENVAT credit, wherever applicable, shall be allowed for Service tax and KKC, but not for SB Cess.
Treatment on invoices outstanding as on 31/05/2016.
The following shall be the treatment of KKC on the invoices outstanding as on 31/05/2016;
| Service is Provided before 1st June | ||||
| Particulars | Service is Provided before 1st June | Invoice is raised before 1st June | Payment is made before 1st June | Applicability of Krishi Kalyan Cess (KKC) |
| Case 1 | Yes | Yes | Yes | No |
| Case 2 | Yes | No | Yes | No |
| Case 3 | Yes | Yes | No | Yes |
| Case 4 | Yes | No | No | Yes |
Case1: Service is provided before 1st June, Invoice is raised and payment received before 1st June – KKC not applicable
Case2: Service is provided before 1st June, Invoice is raised after 1st June, but payment received before 1st June – KKC not applicable
It is to be noted here that if the invoice is not raised within 14 days from date of receipt of payment , KKC would be applicable.
Case 3: Service is provided before 1st June, Invoice is raised before 1st June but payment is received after 1st June – KKC applicable
Therefore in all cases where invoice has been issued before 1st June, and the payment has not been made, it is advisable to make the payment before 31/05/2016 to avoid KKC of 0.5%.
Case 4: Service is provided before 1st June, Invoice is raised and payment received after 1st June – KKC applicable
Kindly take note of the above mentioned amendments and make the necessary changes.
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