Pay Swachh Bharat cess on services from November 15

Several services, including air travel, telephone, banking and eating out, will cost more from November 15 when the Centre will start levying 0.5 per cent cess on all taxable services to fund the Swachh Bharat programme.

The additional cess would be over and above the 14 per cent Service Tax rate which is already being levied. “The government has decided to impose, with effect from November 15, 2015, a Swachh Bharat cess at the rate of 0.5 per cent on all services, which are presently liable to service tax,” a Finance Ministry statement said.

This is expected to yield the government an additional about Rs 400 crore remainder of the current fiscal. The decision to impose 0.5 per cent cess will translate into a tax of 50 paise on every Rs 100 worth of taxable services.

Earlier, Finance Minister Arun Jaitley had in Budget 2015-16 proposed to levy the Swachh Bharat cess of up to 2 per cent “on all or certain services, if need arises”.

“Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives,” the statement added.

Swachh Bharat is the major programme announced by Prime Minister Narendra Modi-headed government, which aims to ensure cleanliness across the country.

Earlier, Andhra Pradesh Chief Minister N Chandrababu Naidu, who headed the sub-group of chief ministers on Swachh Bharat Mission (SBM), suggested the Centre to impose cess on various services to raise funds for implementing programmes under the scheme.

The government had, in Budget 2015-16, estimated to collect over Rs 2.09 lakh crore from service tax. With 0.5 per cent additional cess, the government may get another Rs 400 crore in this fiscal.

The Centre plans to distribute the additional fund raised from extra cess to various states to take up programmes for solid and liquid waste management plants, build toilets to end open defecation and other activities under Swachh Bharat scheme.