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Service Tax Rate Chart w.e.f. 1st June 2016 (Krishi Kalyan Cess)


From 1st June 2016


Service Tax Basic Rate= 14%

Swachh Bharat Cess = 0.5% w.e.f. 15 Nov. 2015

Krishi Kalyan Cess = 0.5% w.e.f. 1st June 2016

Total Effective Rate of Service Tax = 15%

Cenvat Eligible= Basic Service Tax ie. 14%

What is Krishi Kalyan Cess

A Cess is a Tax that is collected by the government to be used for a specific purpose. The collections from levy of cess can be used only for the purpose for which it has been collected and not for any other purpose.
Just like Swachh Bharat Cess has been levied for cleanliness, similarly Krishi Kalyan Cess has been introduced for improving agricultural facilities.
This Cess won’t be levied on your Income but would be levied on all Services on which Service Tax levied. Therefore, from 1st June, the effective rate of service tax would be 15%.
This new Krishi Kalyan Cess would be applicable on all your Payments for Services like like Telephone Bill, Internet Bill, Rent Payment, Restaurant Bill Payment, Under Construction Property, Air Travel Agent, Digital Advertisements, etc. It is to be noted that the Service Provider cannot simply mention 15% Tax on the Invoice and he would be required to mention the break up of the Invoice.
Krishi Kalyan Cess for Services
provided before 1st June 2016
Krishi Kalyan Cess is applicable from 1st June 2016. In cases where the services have been provided after 1st June and the payment received after 1st June – Krishi Kalyan Tax would be applicable in all such cases.

However, in some cases – it may be applicable for services provided before 1st June as well. The following chart explains the cases on which the Krishi Kalyan Cess would be applicable and the cases in which the Krishi Kalyan Cess wont be applicable

Case 1: Service is provided before 1st June, Invoice is raised and payment received before 1st June – Krishi Kalyan Cess would not be applicable and total tax applicable would be 14.50%. 


Case 2: Service is provided before 1st June, Invoice is raised after 1st June but the payment received before 1st June – Krishi Kalyan Cess would not be applicable and total tax applicable would be 14.50% 


It is to be noted here that if the Invoice is not raised within 14 days of receipt of payment, Krishi Kalyan Cess would be applicable and the total tax applicable in such a case would be 15%. 

Case 3: Service is provided before 1st June, Invoice is raised before 1st June but the payment received after 1st June – Krishi Kalyan Cess would not be applicable and total tax applicable would be 15%. 


Therefore, in all such cases wherein the Bill like your Internet, Mobile, Rent etc has been issued before 1st June – it is advisable to make the payment before 1st June itself to avoid the new 0.5% Krishi Kalyan Cess. If the payment is made before 1st June 2016 – this new 0.5% Krishi Kalyan Cess would not be applicable.

Case 4: Service is provided before 1st June, Invoice is raised before 1st June but the payment received after 1st June – Krishi Kalyan Cess would not be applicable and total tax applicable would be 15%. 


Imp Note: In case of part payment received or part invoice issued – each of the above case would be individually applicable. Therefore for part payment received before 1st June – Krishi Kalyan Cess would not be applicable and for payment received after 1st June – Krishi Kalyan Cess would be applicable.

Other Relevant Points regarding Krishi Kalyan Cess

  1. Krishi Kalyan Cess should be levied and
    collected @ 0.5% in accordance with the provisions of Chapter VI. This
    cess would be levied @ 0.5% on the total value of services for the
    purpose of financing and promoting initiatives to improve agriculture.
  2. The proceeds of the Krishi Kalyan Cess
    shall first be credited to the Consolidated Fund of India and the
    Central Govt after due appropriation made by Parliament in law in this
    behalf, utilise such sums of money of the Krishi Kalyan Cess for the
    purpose specified above.
  3. The provisions of Chapter V of the
    Finance Act 1994 and the rules made thereunder including those relating
    to refunds and exemptions from tax, interest and penalty shall, as far
    as may be, apply in relation to the levy and collection of the Krishi
    Kalyan Cess on taxable services, as they apply in relation to the levy
    and collection of tax on such taxable services.
  4. Input Credit of Krishi Kalyan Cess would be allowed
    to be claimed against Krishi Kalyan Cess. However, it is to be noted
    that input credit of Swachh Bharat Cess is not allowed to be claimed
FOR BETTER UNDERSTANDING AND CALCULATIONS, USE FOLLOWING CHARTS




Accounting Codes for Krishi Kalyan Cess
KKC                  – 00441509
Interest on KKC- 00441510
Penalty for KKC- 00441512

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One comment

  1. Thanks for details Explanation for Service Tax rates.
    Especially those Krishi Kalyan Cess Codes are great helpful for me.

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