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What is swachh bharat cess – rate 0.5 % on taxable value

What is swachh bharat cess – rate 0.5 % on taxable value
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As we all know swachh bharath  is a national campaign for a clean hygienic,Open-Defecation Free India, Initiated by India Government. The campaign was started on 2nd october 2014.

What is Swachh Bharat Cess?

Popularly called SBC, It is a Cess 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 service.

  • The swachh bharath cess shall be utilized for financing Swachh Bharath Initiatives.
  • The cess became applicable from 15th Novemebr 2015
  • SBC is applicable for all services under reverse charge mechanism.
  • No CENVAT credit is available for SBC ,and cannot be utilized for the payment of any tax by taking credit.

Calculation of SBC

SBC will be calculated on the total taxable service amount.

For Example : Hotel room rent                                 Rs  2000.00

Service tax    14%  on total 2000                                         280.00

SBC @ 0.5% on total service amount                                   10.00

Total                                                                                       2290.00

SBC is liveable on taxable service amount , not on service tax, Hence added with service tax rate.

SBC Would be charged ,collected and deposited separately, It should not charged along with service tax. SBC Shown independently in Service Invoice.Also service provider maintain a separate ledger for accounting SBC. SBC Applicable on all taxable services, except on exempt & negative list of services.

Accounting Codes for the payment of Swachh Bharat cess.

Swachh Bharat Cess(Minor Head) Tax Collection Other Receipts(Interest) Penalties Deduct Refunds
0044-00-506 00441493 00441494 00441496 00441495

How SBC Charged in the case of Abatement ?

SBC will be charged in the same manner how service tax is calculated under Abatement.

Example : Consider Transport of goods by rail ,The abatement is 70% and taxable portion is 30%

Service tax rate is = 14 x 30 % = 4.2 %

SBC rate is             =  0.5 x 30% – 0.15 %

Hence the SBC Rate under abatement is 0.15 % instead 0.5%

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