Presentation on Swachh Bharat Cess

2.  Swachh Bharat Cess has introduced by CBEC vide
notification 22/2015-Service Tax on 6th
December,
2015.
 SBC has been imposed for the purposes of financing
and promoting Swachh Bharat initiatives or for any
other purposerelating thereto.
 Swachh Bharat Cess (SBC) which shall be levied and
collected in accordance with the provisions of
Chapter VI of the Finance Act, 2015, called Swachh
Bharat Cess, as service tax on all the taxable
services at the rate of 0.5% of the value of taxable

3.  All servicesarebeing subjected to SBC, except:
a.)Servicesin NegativeList
b.)Serviceswholly exempt from servicetax
 SBC would be calculated in the same way as Service
tax is calculated. Therefore, SBC would be levied on
thesametaxablevalueasservicetax.
 SBC is not a cess on Service Tax. SBC shall be levied
@ 0.5% on thevalueof taxableservices.
 Effective rate of service tax plus SBC, post
introduction of SBC, would be[14% + 0.5%]

4.  Theprovisionsof Swachh Bharat Cesswill comeinto
effect from 15th day of November, 2015 (no tificatio n
No .21 /201 5-Service Tax, dated 6th No vember, 201 5
refers).
 SBC would be levied, charged, collected and paid to
Government independent of servicetax.
 This needs to be charged separately on the invoice,
accounted for separately in the books of account and
paid separately under separate accounting code, as
follows:

5. Swachh Bharat Cess (Minor
Head)
0044-00-506
Tax Collection 00441493
OtherReceipt 00441494
Penalties 00441496
Deduct Refund
00441495

6.  Sub-rule (7D) to rule 6 has been inserted vide
notification 25/2015-Service Tax, dated 12th
November, 2015 so as to provide that the person
liable for paying the service tax under sub rule (7),
(7A), (7B) or (7C) of rule 6 of Service Tax Rules,
shall have the option to pay SBC as determined as
per thefollowing formula:-
Service Tax liability [calculated as per sub- rule (7 ),
(7 A), (7 B) o r
(7 C)] X0.5%/1 4%

7.  As regards Point of Taxation, SBC is a new levy,
which was not in existence earlier. Hence, rule 5 of
the Point of Taxation Rules would be applicable in
thiscase.
 Therefore, in caseswherepayment hasbeen received
and invoice is raised before the service becomes
taxable, i.e. prior to 15th November, 2015, thereisno
liability of Swachh Bharat Cess.
 In cases where payment has been received before the
service became taxable and invoice is raised within
14 days, i.e. upto 29th November, 2015, even then
theservicetax liability doesnot arise.

8.  Swachh Bharat Cesswill bepayable on services
which areprovided on or after 15th Nov, 2015,
invoicein respect of which isissued on or after that
dateand payment isalso received on or after that
date.
 Swachh Bharat Cesswill also bepayablewhere
serviceisprovided on or after 15th Nov, 2015 but
payment isreceived prior to that dateand invoicein
respect of such serviceisnot issued by 29th Nov,
2015.

9.  Rule -5 : Payment of tax in case of new
services.-
Whereaserviceistaxed for thefirst time, then,-
(a) no tax shall be payable to the extent the invoice
has been issued and the payment received against
such invoicebeforesuch servicebecametaxable;
(b) no tax shall be payable if the payment has been
received before the service becomes taxable and
invoice has been issued within fourteen days of the
datewhen theserviceistaxed for thefirst time.

10.  Abatement would apply for SBC also in thesame
manner asit appliesfor servicetax. SBC will attract
thesamepercentageof valueasprovided in the
notification No. 26/2012-ServiceTax, dated 20th
June, 2012.
 For example, in thecaseof GTA, [ServiceTax +
SBC]% would be(14% ServiceTax + 0.5% SBC) X
30% = 4.35% (4.20%+0.15%).

11.  SBC is not integrated in the Cenvat Credit Chain.
Therefore, creditof SBC cannotbeavailed.
 Since the credit o f SBC canno t be availed, SBC
canno t be paid by utilizing credit o f any o ther duty o r
tax.

12.  Reverse charge under notification No.30/2012-
ServiceTax dated 20th June, 2012 shall beapplicable
for thepurposeof levy of Swachh Bharat Cess
mutatismutandis.( Notification No. 24/2015-Service
Tax dated 12th November, 2015)

13. Presentation By:
Deepak Gaur
Email:deepakgaur233@gmail.com
Mob. :88023 45266