In the Union Budget 2016-17, Finance Minister Arun Jaitley announced the Krishi Kalyan Cess which will be applicable at the rate of 0.5 per cent on all taxable services.
What this means is that it will be applicable over and above the Swachh Bharat Cess and Service Tax.
The same is with effective from June 1, 2016. As of now, we are already paying service taxes at the rate of 14 per cent and a Swachh Bharat Cess at a rate of 0.5 per cent. Now along with Krishi Kalyan Cess it will be total of 15 per cent as service tax.
This amount from the Krishi Kalyan Cess will be used for financing initiatives for improvement of agriculture and welfare of farmers.
Where is Krishi Kalyan Cess applicable?
As it is said, it is applicable on all the goods and services where the tax is already applicable. Here are few examples where it can be applicable. However, it is not a complete list but to give a fair idea.
- Telephone bills
- Under construction property
- Internet bills
- Travel Agent
- Rent Payments
- Restaurant bills
- Cable Bill
Things to Note
If the service is availed before June 1, but the payment is made on or after June 1 Krishi Kalyan Cess will be applicable.
If the service is availed before the date and even payment is made before the date, there will be no cess. But if invoice is generated after June1, Krishi Kalyan Cess will not be applicable.
For the purpose of levy and collection of Krishi Kalyan Cess, the provisions of Chapter V of the Finance Act 1994 and the rules made there under, including those relating to refunds and exemption for tax, interest & imposition of penalty on taxable services, shall also apply.
The funds of the Krishi Kalyan Cess will be first credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament can utilise money of the Krishi Kalyan Cess for defined purposes.
Why the Krishi Kalyan Cess?
Last year, the government added a Swach Bharat cess, which would be used for ensuring cleanliness. For the Krishi Kalyan cess there is a definite purpose for why it was levied. The cess would be used for the development of several initiatives, which would ultimately benefit the farmers.
Many individuals argue that the cess keeps adding to the burden of the common man and the government should have some solid programmes, instead of a Krishi Kalyan Cess. However, that maybe better said and done. For the moment the cess remains and we hope it would help overcoming rural distress, particularly of farmers.
To know what has got more expensive after the levy of the Krishi Kalyan cess click to read.