FAQ ON SWACHH BHARAT CESS

In his speech for Budget 2015-16 the Hon’ble Minister of Finance said that "Swachh Bharat is not only a programme of hygiene and cleanliness but, at a deeper level, a programme for preventive health care, and building awareness". Since then we all were awaiting the date from which this cess is going to be enforced. At last on 6th of Nov. 2015 Central Government issued Notification No. 21/2015-Service Tax whereby announced 15th of Nov. 2015 as the date for enforcement of Swachh Bharat Cess. 

A step further, Central Government has also cleared the doubts in the mind of general public about the utilization of the fund created out of Swachh Bharat Cess. It has been promised that the proceeds of the SBC will be credited to the Consolidated Fund of India, and the Central Government may, after due appropriation made by Parliament, utilize such sums of money of the SBC for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

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Date of enforcement of Swachh Bharat Cess

Chapter VI (Section 119) of the Finance Act 2015 contains provisions for levy and collection of Swachh Bharat Cess (SBC). Now the Government has announced 15th November, 2015 as the date from which the provisions of Section 119 would come into effect. (notificationNo.21/2015-Service Tax, dated 6th November, 2015 refers).

Copy of Notification No. 21/2015-Service Tax:-

http://www.cbec.gov.in/htdocs-servicetax/st-notifications/st-notifications-2015/st21-2015

Simultaneously, Government has also notified levy of Swachh Bharat Cess at the rate of 0.5% on all taxable services. Effectively, the rate of SBC would be 0.5% and new rate of service tax plus SBC would be 14.5%. As such SBC translates into a tax of 50 paisa only on every one hundred rupees worth of taxable services. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives.

Provided that Swachh Bharat Cess shall not be leviable on services which are exempt from service tax by a notification issued under sub-section (1) of section 93 of the Finance Act, 1994 or otherwise not leviable to service tax under section 66B of the Finance Act, 1994. 

Copy of Notification No. 22/2015-Service Tax:-

http://www.cbec.gov.in/htdocs-servicetax/st-notifications/st-notifications-2015/st22-2015