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10 Nov 2015

FAQs on Swachh Bharat Cess

Introduction of SBC has raised doubts regarding its applicability, exemptions and CENVAT Credit. Team DYN has made an attempt to clarify these doubts in form of FAQ.

S. No. Question Answer
1 What will be the date of introduction of SBC 15th November, 2015
2 What will be the Effective rate of SBC? 0.5% of taxable value
3 Whether SBC would be applicable on exempted service? No
4 Whether SBC would be applicable on services covered under Negative List? No
5 Whether SBC would be chargeable on Gross amount charged or on net taxable value in case of abated service? Net Taxable Value
6 On which value SBC would be calculated in respect of services mentioned under Rule 2A, Rule 2B and Rule 2C of Service Tax (Determination of Value) Rules, 2006 being works contract services, money changing services and restaurant/outdoor catering services? Value of service arrived after applying provisions given under Rule 2A, Rule 2B, and Rule 2C of Service Tax (Determination of  Value) Rules, 2006.
7 Whether CENVAT Credit of SBC paid on input services can be availed? No
8 Whether duty of SBC can be discharged by utilizing CENVAT Credit? Yes# Rule 3(4) CCR 2004 read with Section 119(2) FA, 1994. Rule, 3(4) CCR, 2004 allow utilization of CENVAT Credit for payment of service tax and Section 119(2) of the Finance Act, 1994 provides that SBC shall be levied and collected as service tax. This issue need clarification from CBEC.
9 What would be Point of Taxation – (Direct Charge)? POT will be determined according to Rule 4#.
10 What would be Point of Taxation – (Reverse Charge)? POT will be determined according to Rule 7#.
11 Whether SBC would be applicable where service tax is payable under composition scheme specified under Rule 6 STR, 1994? No specific exemption has been granted in respect of these services, therefore, SBC should be applicable on taxable value. Government should introduce mechanism for calculation of taxable value.
12 Whether SBC should be disclosed separately in the invoice? Yes
13 Under which code SBC is required to be deposited? Accounting head is not yet specified.

# Detailed analysis on point 8, 9 and 10 will be shared in forthcoming DYKS(s).