Krishi Kalyan Cess(KKC) - Brief Analysis
Krishi Kalyan Cess(KKC) - Brief Analysis
As we all know that the Finance
Minister of India, Mr. Arun Jaitley had proposed a new cess i.e. Krishi Kalyan
Cess(“KKC”) @ 0.50% in budget 2016 on all taxable services for the purposes of
financing and promoting initiatives to improve agriculture or for any other
purpose relating thereto.
The KKC has been introduced on all taxable services w.e.f. 01-06-2016.
The impacts of KKC are discussed as under:
1. Cenvat credit of KKC shall be allowed
to provider of taxable service provider for payment of output KKC only.
2.
Output
KKC cannot be paid by utilizing the Cenvat credit of service tax,
3. Separate ledgers shall be required
for accounting of Cenvat credit and Output liability of KKC,
4. KKC shall be charged separately over
the invoices,
5.
The
rate of service tax taxable in the hands of service receiver for services under
reverse charge are mentioned below:
|
S.No.
|
Particulars
|
Rate of tax
|
|
1.1
|
Rent a Cab services
(abated value)
|
6% (15*40%)
|
|
1.2
|
Rent a Cab services
(non abated value)
|
7.50% (15*50%)
|
|
2
|
Supply of manpower
services
|
15% (15*100%)
|
|
3.1
|
Works contract services
(Original works)
|
3% (15*40%*50%)
|
|
3.2
|
Works contract services
(other than above)
|
5.25%(15*70%*50%)
|
|
4.1
|
Goods Transport Agent
(GTA) in relation to transport of other than household items
|
4.50%
|
|
4.2
|
Goods Transport Agent
(GTA) in relation to transport of household items
|
5.60%
|
6.
Point
of taxation in case of normal charge shall be governed by Rule 5 of Point of
taxation rules. The same is discussed below with example:
|
S.No.
|
Date of Invoice
|
Date of Payment received
|
Applicability of KKC
|
|
1
|
14-06-2016
|
20-05-2016
|
No
|
|
2
|
20-06-2016
|
20-05-2016
|
Yes
|
|
3
|
20-05-2016
|
20-05-2016
|
No
|
|
4
|
05-06-2016
|
03-06-2016
|
Yes
|
|
5
|
20-05-2016
|
03-06-2016
|
Yes
|
As per Rule 5, KKC
shall be payable on all debtors pending as on 31-05-2016 by issuing a separate
debit note.
7. Point of taxation in case of reverse charge shall be governed by rule 7
of Point of taxation rules.
As per rule 7, the point of taxation
shall be the date of payment to the vendor. But as per the Notification no.
21/2016 dated 30-03-2016, the central government has inserted an explanation
i.e. “Where Service has been provided and the invoice issued before the date of
change of liability, but payment has not been made as on such date, the POT
shall be the date of issuance of invoice.”
Therefore if the period of provision
of service and issued date of invoice is before change in liability of service
receiver then KKC shall not be applicable.
8. The anomaly of KKC on Normal Charge
and Reverse Charge:
|
Case
|
Period of service
|
Date
of Invoice
|
Date
of Payment
|
KKC
payable
|
|
Normal
Charge
|
Prior to levy of KKC
|
20-05-2016
|
05-06-2016
|
Yes
|
|
Reverse
Charge
|
Prior to levy of KKC
|
20-05-2016
|
05-06-2016
|
No
|
Thus, under similar situation, on one
hand KKC would be payable in case liability to pay Service tax is on service
provider but KKC would not be payable when liability to pay Service tax is on
the service recipient under reverse charge.
9. The Central Government has also
announced the accounting code vide circular no. 194/04/2016 dated 26-05-2016 as following:-
|
S.No.
|
Krishi Kalyan Cess
|
Tax collection
|
Other receipts
|
Deduct refunds
|
Penalties
|
|
1
|
0044-00-507
|
00441509
|
00441510
|
00441511
|
00441512
|
(Author – CA NEERAJ KUMAR, RAPG & CO. CHARTERED ACCOUNTANT in Practice from Delhi and can be contacted at rapg@rapg.in)
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