Krishi Kalyan Cess is proposed to be levied with effect from 1st June, 2016 on any or all the taxable services at the rate of 0.5% on the value of such taxable services. By introducing such levy the effective rate of Service tax will increased from 14.50% to 15% (14% ST+ 0.5 Swachh Bharat Cess + 0.5% Krishi Kalyan Cess).
As per TRU letter No. D.O.F. No.334/8/2016-TRU dated 29-02-2016 the Credit of Krishi Kalyan Cess paid on input services shall be allowed to be used for payment of such proposed Cess.
The purposes of the Government for introducing Krishi Kalyan Cess is financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.
FINANCE BILL 2016
CHAPTER VI
KRISHI KALYAN CESS
- (1) This Chapter shall come into force on the 1st day of June, 2016.
(2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Krishi Kalyan Cess, as service tax on all or any of the taxable services at the rate of 0.5 per cent. on the value of such services for the purposes of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.
(3) The Krishi Kalyan Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.
(4) The proceeds of the Krishi Kalyan Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Krishi Kalyan Cess for such purposes specified in sub-section (2), as it may consider necessary.
(5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Krishi Kalyan Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under the said Chapter or the rules made thereunder, as the case may be.