APPLICABILITY OF KRISHI KALYAN CESS WITH EFFECT FROM 01st JUNE, 2016
Under Chapter VI of Finance Act, 2016, Government has introduced new levy in the form of Krishi Kalyan Cess (KKC) at the rate of 0.50% with effect 1st June, 2016. This cess would be in addition to any cess or service tax leviable on such taxable services.
Thus, w.e.f. 01st June, 2016, rate of service tax will be 15.00% consisting of Service Tax (ST) – 14.00%, Swatchh Bharat Cess (SBC) – 0.50% and Krishi Kalyan Cess (KKC) – 0.50%.
Applicability of Krishi Kalyan Cess (KKC) on services would be defined in term of section 67A of the Finance Act, 1994 read with rule 5 of the Point of Taxation Rules, 2011.
POINT OF TAXATION OF KRISHI KALYAN CESS ON SERVICES
As per Rule 5 of Point of Taxation Rules, 2011, there shall be no tax liability;
Ø To the extent the invoice is raised and payment is received before such new tax becomes taxable i.e. 01st June, 2016.
Ø If the payment has been received before such new service become taxable i.e. 01st June, 2016 and invoice is raised within 14 days of the date when such new service become taxable.
Therefore in case services are provided and Invoices has been issued but payment has not been received till 31st May, 2016 then tax would also be leviable on the outstanding amount as on 31st May, 2016.
To comply with statutory provision, a debit note or supplementary Invoice may be raised for levy of KKC at the rate of 0.50% on value of all taxable services outstanding as on 01st June, 2016.