Swachh Bharat was defined in the “Hon’ble Finance ministers 2015-16 speech” as the means of renewing India via the Swachh Bharat. Abhiyan. The Swachh Bharat Abhiyan is the national program by the Indian state government for keeping the streets clean, roads as well as Indian infrastructure to build a “clean India” so that neatness and hygiene are enhanced across India. Therefore, in the 2015-2016 budgets, an enabling provision to tax Swachh Bharat Cess at the rate of 2% or less on some services or all was allowable.
Implementation of Swachh Bharat Cess
Based on the 2015-2016 budgets, the government delegated Service Tax Notification no. 21/2015 stating that Swachh Bharat Cess may commence operation from the 15th day of November 2015 at a rate of 1/2% on every taxable service. Based on this notification, Swachh Bharat Cess has been put into use since the 15th day of November 2015 in India.
Swachh Bharat Cess will not be legally responsible for cases where payment has been obtained and invoice is lifted before the 15th day of November 2015. In a case where payment has been gotten before the service became taxable and the charge is lifted up to the 29th day of November 2015, even then the tax charge does not occur. Swachh Bharat Cess will be owed on services which are provided on or after 15th November 2015 but payment is gained before the date and charge in respect of this service is not issued by 29th November 2015. The effective rate of service tax in addition to Swachh Bharat Cess is 14.5% (14%+0.5%)
Invoice Format and Accounting
Swachh Bharat Cess would be levied charged, collected and paid to the government not depending on tax from services. However, it requires to be charged differently on the invoice, accounted for differently under distinct accounting code. Some of the Swachh accounting codes are listed below:
Swachh Bharat Cess (minor head): 0044-00-506
Tax Collection: 00441493
Other Receipts: 00441494
Deduct Refunds: 00441495
Swachh Bharat Cess Rate
Though the government has the right to levy a Swachh Bharat Cess of up to 2%, only 0.5% has been enacted by the government. Swachh Bharat cess will be applicable at 0.5% on the worth of taxable service. Every service for which service tax is applicable is legally responsible to pay Swachh Bharat cess. Just those services completely exempt from service tax under any notification are not made responsible for Swachh Bharat cess.
Cenvat credit for Swachh Bharat cess: Swachh Bharat cess is not incorporated in the Cenvat credit chain, therefore, the credit of Swachh Bharat cess cannot be rewarded. More so, Swachh Bharat cess cannot be paid by the use of credit or any other tax or duty.
Swachh Bharat cess for restaurants
Swachh Bharat cess would be intended for eateries in respect to service given in relation to serving of beverages or food by an eatery, mess or eating joint, having the capacity of air-conditioning or central air-heating in any section of the eatery. Service tax would be 0.5% of 40% of the overall amount which simply means 0.2% of the overall amount. The collective service tax and Swachh Bharat Cess charge would amount to (14% ST+0.5% SBC) of 40% of the overall amount, which simply means that 5.8% of the overall amount charged.