Krishi Kalyan cess of 0.5% from Wednesday

IANS 31 May 2016

The Krishi Kalyan Cess of 0.5% on services imposed by Finance Minister Arun Jaitley comes into force from Wednesday through which the government proposes to collect Rs 5,000 crore during the remaining 10 months of the current fiscal.

The total service tax collection target has been pegged at Rs 216,000 crore during the current fiscal. In addition, the government intends to collect Rs 10,000 crore from the 0.5% Swachh Bharat Cess and Rs 5,000 crore from Krishi Kalyan Cess.

"I propose to impose a cess called Krishi Kalyan Cess at 0.5% on all taxable services, the proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers," Jaitley had said in his budget speech.

"The cess will come into force with effect from June 1, 2016."

The overall rate, including cess, which will be at 15%, will affect a host of services -- telephones, restaurants, cinemas, visits to beauty parlours, air travel, insurance, DTH, credit and debit cards, courier, healthcare, banking and professional consultancies.

Earlier, there were two other cess under the service tax net -- education cess and secondary and higher education cess. These were rationalised and subsumed into the overall service tax rate of 14%.

Though the Krishi Kalyan cess is only 50 paise per Rs 100 of transaction, on a larger scale the proceeds could fetch more than Rs 5,000 crore, finance ministry officials said.

The officials said the increase in the service tax rate is part of the effort to bring it on par with the expected rate of goods and services tax (GST) of 17%-18%.

In the 2015-16 budget, Jaitley had raised the service tax rate from 12.36 to 14 per cent. From November 15, 2015, an additional 0.5% Swachh Bharat cess had also come into force.

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Comments

User

shadi katyal

10 years ago

It is a nation budened with taxes and yet more and more are piled onm the public.Sorry I miossed that what this tax will be utilised for? Would the peasents get any part of it in case of failure of crops??
How amny new taxes has been imposed on the poor nation?