The finance minister of India, Arun Jaitely introduced Swachh Bharat Cess in 2015-16 budget speech to regenerate India along with the Swachh Bharat Abhiyan. Swachh Bharat as we all know is a nationwide spread campaign launched by the Prime minister of the current government in India for creating a ‘Clean India’ by clearing litter and dump from streets, roads and infrastructures of India, all the while improving cleanliness and hygiene across India. This lead to the emergence of a provision of leaving Swachh Bharat Cess in the Budget of 215-16 at the rate of 2% or less on the services at many places and in many fields.
IMPLEMENTATION OF THE CESS
The Swachh Bharat Cess came into force from 15th November, 2015 at a rate of 0.5% on all taxable services after the issue of Service Tax Notification No.21/2015 by the Government in the budget of 2015-16 and has been in implementation since then.
It is made clear that the Swachh Bharat Cess did not apply on cases where payment had been received and invoice raised before the 15th of November 2015. The service tax is not liable even when the payment was received before the service tax notification came into force but the invoice was raises upto 29th November, 2015. It is payable only on the services that have been availed or provided on and after the Service tax notification cane into force on 15th November 2015.
After the addition of the Swachh Bharat Cess the effective service tax rate stands at 14.5%.
INVOICE FORMAT & ACCOUNTING
Swachh Bharat Cess has been levied, charged and paid to the Government of India apart from the already existing service tax. Therefore it has been mentioned and charged separately, and even accounted in the books of account separately and paid separately under a separate account code. Following are the account codes for the Swachh Bharat Cess :
Swachh Bharat Cess (Minor Head) – 0044-00-506
Tax Collection -00441493
Other Receipts – 00441494
Penalties – 00441496
Deduct Refunds – 00441495
SWACHH BHARAT CESS RATE
The government has levied only a cess of 0.5% even though the tax notification gives it the ability to levy a Swachh Bharat Cess of upto 2%. The Swachh Bharat tax is compulsorily applicable on all services for which the government charges service tax and only the services that are not charged with service tax by the government is exempted from the liability to charge Swachh Bharat Cess.
CENVAT Credit for Swachh Bharat Cess
The Cenvat Credit chain does not integrate in it the Swachh Bharat Tax, hence clearing stating that the credit of paying Swachh Bharat Cess cannot be availed by any tax payer.
SWACHH BHARAT CESS FOR RESTAURANTS
The application of Swachh Bharat Cess in a restaurant is calculated by keeping a lot of factors in mind in respect to the services provided by the restaurant, eating joint or mess. These services can be in respect to the serving if food and beverages by the eating Joint or restaurant or services and facilities like air conditioning or central air heating, may it be in any part of the establishment. The service tax charged in such cases is 0.5% of the 40% of total amount, which results into 0.2% of the total amount. The cumulative calculation of Service tax and Swachh Bharat Cess liability result into [14% ST + 0.5% SBC] of 40% of the total amount, i.e., 5.8% of the total of the charged amount.
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