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Krishi Kalyan Cess – Important Points

Service tax -Krishi Kalyan Cess

Important points
1. This Cess (KKC) is applicable only on taxable services
2. This Cess is applicable w.e.f. 01.06.2016
3. This cess is leviable on the value of services, thus, the effective rate of service tax would be 15%
w.e.f. 01.06.2016 (i.e. 14% as Service Tax, 0.5% as SBC and 0.5% as KKC)
4. This cess will not be applicable on non taxable services including the exempted services
5. This cess is to be disclosed separately on the invoice and paid separately
6. The cenvat credit of KKC shall be available and shall be utilized only for the payment of KKC
Thus, separate accounts needs to be maintained. (Proper amendment in Cenvat Credit Rules’
2004 is awaited)
7. Refund of this KKC shall also be allowed as the cenvat credit is there. Further, refund of this cess shall be allowed to Exporter of Service as well as Exporter of Goods as there is no restriction of its availment. Suitable amendment is awaited in CCR’2004 as well as refund notifications
8. This Cess shall be applicable only on the abated value in case of services covered under
abatement scheme
9. KKC shall also be applicable on the services covered under Reverse Charge Mechanism
10. Separate accounting codes for its payment shall be released soon
11. Rule 5 of Point of Taxation Rules’ 2011 need to be referred for its applicability in case of ongoing contracts on 01.06.2016.
Thus, if payment is made before 01.06.2016 then this cess is not applicable.
Abhishek Sharma

Abhishek Sharma

Is a Practicing CA from Delhi .
Abhishek Sharma
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