Impact of Swach Bharat Cess on Service Tax

Notification no. 22/2015-ST has been issued whereby exemption has been granted in excess of SBC calculated at the rate of 0.5 percent of the value of taxable services. Effectively, rate of cess would be 0.5% and new rate of service tax would be 14.5% . "This will translate into a tax of 50 paisa only on every one hundred rupees worth of taxable services.

Effective Rate of Service Tax  & Date

-   Effective rate of service tax post introduction of SBC would be 14.5%

-   Notification Comes in effect from 15^th Nov 2015

Services Rate for abatement in GTA

-   The effective rate of tax on all abatement services would be 14.5% * effective rate under Notification 26/2012-ST. For GTA, it would be 14.5%*30%= 4.35%

Service tax Rate for Works Contract

-   Effective rate of tax in case of original works 5.8% (14.5%*40%)

-   Other than original works 10.15% (14.5%*70%)

SBC impact on Service tax paid Under Reverse Charge

-   SBC would be applicable on all taxable services. Hence, you need to pay SBC along with service tax on the services availed by you.

To Be Mentioned On Invoice

-   SBC would be levied, charged, collected and paid to government independent of service tax. This needs to be charged separately on the invoice.

Rate of tax where services are provided before and after imposition of SBC

The impact of introduction of SBC on different situations is summarized below. (assuming that applicable rate is determined as per Rule 4 of Point of Taxation Rules, 2011)

S.No.	Service Provided	Invoice Issued	Payment Received	Rate of ST
1	Before Imposition of SBC	After Imposition of SBC	After Imposition of SBC	14.5%
2	Before Imposition of SBC	Before Imposition of SBC	After Imposition of SBC	14%
3	Before Imposition of SBC	After Imposition of SBC	Before Imposition of SBC	14%
4	After Imposition of SBC	Before Imposition of SBC	After Imposition of SBC	14.5%
5	After Imposition of SBC	Before Imposition of SBC	Before Imposition of SBC	14%
6	After Imposition of SBC	After Imposition of SBC	Before Imposition of SBC	14.5%

Cenvat Credit

-   There is no amendment in the Cenvat Credit Rules, 2004 regarding availment and utilisation of SBC. In the absence of the same, credit would not be admissible. Amendment in CCR 2004 is required.