Swachh Bharat Cess not on all services: Centre

The government on Tuesday clarified that up to 2 per cent Swachh Bharat Cess on service tax was on the cards, but said it would not be imposed on all services.

 Revenue Secretary Shaktikanta Das said that once the cess was imposed on certain services, the service tax rate on those services could go up to 16 per cent, but the government would take into consideration its impact on various sectors before taking a decision. Deccan Herald had reported that a close reading of the Finance Bill made it evident that consumers could end up paying a hefty 16 per cent service tax.

 “It is under the consideration of the government. As and when there is a requirement, it will be levied. It is not going to be levied overnight. The government will definitely take into account in what way it will impact various sectors, and accordingly it will issue a guideline,” Das told Deccan Herald.

The service tax is currently imposed at the rate of 12.36 per cent. But the Union Budget presented last week proposed to raise it to 14 per cent.

A further unlocking of the Budget provisions in the Finance Bill later revealed that the service tax could go up to 16 per cent as the government planned to levy an additional two per cent Swachh Bharat Cess. Finance Minister Arun Jaitley’s Budget had said that the government was considering a Swachh Bharat Cess of up to two per cent but confusion prevailed on whether it would be levied on the 14 per cent service tax, or on the total value of the services.

The fine print of Finance Bill, 2015, however, said: “There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent on the value of such services for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.”

Das clarified that the cess would certainly not be levied on all services but added that it would take the service tax rate up to 16 per cent on which ever service it is imposed.

“If the government decides, it (service tax) can be up to 16 per cent. But it is open to the government whether to impose the Swacch Bharat Cess at two per cent or less than two per cent,” the revenue secretary said.