Swach Bharat Cess @2%, Service Tax Rate 14.28% or 16%

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  1. Finance Bill 2015 has proposed to introduce Swach Bharat Cess @ 2%.

    Would this Cess be levied on Service Tax portion or on the value of Services.

    Cess is usually levied on the tax to be paid, therefore it should be levied on 2% of 14% making the total tax as 14.28%

    However, the Memorandum to the Budget says that Swachh Bharat Cess @ 2% would be levied on the value of such taxable services. This means that the effective rate of tax would be 14% + 2% = 16%

    Now the confusion is that would the effective rate of Service Tax be 14.28% or 16%?
  2. Shishir Nayak

    Shishir Nayak Member

    Many experts think this suggests it will be 2 per cent of the total value, and not 2 per cent on the service tax.

    If this is the case, every purchase requiring a service tax of 14 per cent will have an additional cess of 2 per cent, resulting in 16 per cent service tax. It is hoped that the government will clarify on this matter.

    It is yet to be decided how many services would attract the Swachh Bharat Cess.
    It is also not clear whether the government would levy such cess on all services. Again, clarity is awaited.
    sai tejesh(ca.final) likes this.
  3. Thanks Shishir for sharing your views
  4. shaik badulla

    shaik badulla New Member

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