Question 1. What Is Kkc?
It is a Cess referred to as as Krishi Kalyan Cess, which shall be levied and gathered according with the provisions of Chapter VI of the Finance Act, 2016, as Service tax on all the taxable offerings at the rate of 0.5% on the cost of such taxable offerings.
Question 2. For What Purpose(s) Kkc Is Proposed To Be Levied?
KKC is proposed to be levied for the purposes of financing and promoting initiatives to improve agriculture and farmers welfare or for another reason bearing on thereto.
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Question 3. What Is The Date Of Applicability Of Kkc?
KKC might be levied on the fee of zero.5% on the fee of all taxable services with impact from June 1, 2016 vide Section 161 of the Finance Act, 2016.
Question four. Whether Kkc Would Be Leviable On All Taxable Services?
Yes, KKC would be levied on all taxable offerings. In this regard, the Central Government vide Notification No. 28/2016-ST dated May 26, 2016 has provided that KKC shall not be leviable on services which might be exempt from Service tax by a Notification issued below Section ninety three(1) or Special Order issued underneath Section ninety three(2) of the Finance Act, 1994 (“the Finance Act”) or in any other case no longer leviable to Service tax underneath Section 66B thereof.
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Question 5. Whether Kkc Would Be Leviable On An Activity Which Is Excluded From The Definition Of ‘carrier’?
No, such pastime could not be leviable to KKC. Following sports are excluded from the definition of ‘Service’ under Section 65B(44) of the Finance Act:
(a)An pastime which constitutes merely,--
a switch of identify in goods or immovable assets, by way of manner of sale, gift or in another way; or
such switch, delivery or supply of any goods that is deemed to be a sale in the meaning of clause (29A) of Article 366 of the Constitution; or
a transaction in cash or actionable claim;
(b)A provision of service by using an employee to the organization within the path of or in terms of his employment;
(c)Fees taken in any Court or tribunal installed underneath any regulation in the mean time in force.
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Question 6. Whether Kkc Would Be Leviable On Services Contained In The Negative List Of Services?
No, KKC would now not be leviable on offerings contained inside the Negative List of services underneath Section 66D of the Finance Act.
Question 7. Whether Kkc Would Be Leviable On Exempted Services?
KKC shall not be leviable on services which might be exempt from Service tax via a Notification issued below Section ninety three(1) or Special Order issued beneath Section ninety three(2) of the Finance Act.
The offerings exempted by using a Notification issued beneath Section ninety three(1) of the Finance Act are as beneath:
Services exempted under the Mega Exemption Notification vide Notification No. 25/2012-ST dated June 20, 2012;
Services exempted, to distinctive percentage underneath the Abatement Notification No. 26/2012-ST dated June 20, 2012;
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Question eight. What Will Be The Effective Rate Of Service Tax W.E.F June 1, 2016 After Applicability Of Kkc?
The powerful fee of Service tax will be 15% with impact from June 1, 2016 i.E. Service tax @ 14%, Swachh Bharat Cess (“SBC”) @ zero.5% and KKC @ 0.5% on value of taxable services.
Question nine. How Kkc Will Be Calculated?
KKC would be calculated in the identical manner as Service tax is calculated and could be levied on the gross value of taxable services and will be computed in accordance with Section sixty seven of the Finance Act and the Rules made there beneath.
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Question 10. Whether Kkc Is A ‘cess On Tax’ And We Need To Calculate Kkc @ 0.Five% On The Amount Of Service Tax Like We Were Earlier Doing For Calculating Education Cess And She Cess?
No, KKC is not a Cess on Service tax. KKC shall be levied @ zero.Five% on the fee of taxable services.
Question 11. How Kkc Will Be Calculated For Services Where Abatement Is Allowed?
The Central Government vide Notification No. 28/2016-ST dated May 26, 2016 has clarified that KKC might be levied on cost of taxable offerings after availing the benefit of abatements by manner of an exemption provided vide Abatement Notification No. 26/2012-ST dated June 20, 2012 i.E. KKC might be computed on abated cost of taxable offerings.
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Question 12. What Will Be The Effective Rate Of Service Tax In Case Of Specified Services Under The Abatement Notification Like Gta Services (other Than Used Household Goods) After Levy Of Kkc?
Service tax is needed to be paid on 30% of cost of taxable provider, after abatement of 70% as supplied below the said Abatement Notification. The effective rate of Service tax consisting of SBC and KKC would be 4.50% (i.E. 30% of 15%).
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Question thirteen. How Kkc Would Be Calculated On Specified Services Covered Under Service Tax (determination Of Value) Rules, 2006 [“the Service Tax Valuation Rules”]?
The Central Government vide Notification No. 28/2016-ST dated May 26, 2016 has clarified that the price of taxable services for the purpose of KKC will be the price as determined according with the Service Tax Valuation Rules.
Question 14. What Will Be The Effective Rate Of Service Tax In Case Of Works Contract Service After Levy Of Kkc?
As in keeping with Rule 2A of the Service Tax Valuation Rules, KKC needs to be applied at the side of Service tax and SBC on precise element and the effective rate of Service tax in case of Works settlement Service might be as below:
Ø In case of original works: 6% (15%*40%); and
Ø Other than original works: 10.50% (15%*70%)
Question 15. What Will Be The Effective Rate Of Service Tax In Case Of Ac Restaurant Services And Outdoor Catering Services?
The KKC would be calculated in comparable manner on AC Restaurant Services and Outdoor catering offerings as calculated for Works Contract provider . As per Rule 2C of the Service Tax Valuation Rules, KKC desires to be implemented together with Service tax and SBC on distinct element.
Therefore, the powerful fee of Service tax after KKC might be as underneath:
Ø In case of AC Restaurant services: 6% (15%*40%); and
Ø In case of Outdoor catering services: nine% (15%*60%)
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Question sixteen. How Kkc Will Be Calculated For Services Under Reverse Charge Mechanism?
The Central Government vide Notification No. 27/2016-ST dated May 26, 2016, has clarified that the KKC could be leviable on detailed offerings under the Reverse Charge Notification No. 30/2012-ST dated June 20, 2012 and all provision for chargeability of Service tax shall be applicable mutatis mutandis for the functions of KKC also. In other words, KKC in conjunction with Service tax will be paid on taxable services specified underneath Reverse Charge and Partial Reverse Charge Mechanism as properly for Service Receiver to pay the Service tax, SBC and KKC.
Question 17. What Will Be The Point Of Taxation (“pot”) For Determination Of Kkc Taxability For A Service Provider?
POT in case of latest levy on offerings will be governed with the aid of Rule five of Point of Taxation Rules, 2011 (“the POTR”).
As in step with Rule five study with motives inserted vide Notification No. 10/2016-ST dated March 1, 2016, best in following two conditions (given underneath), the KKC shall not be payable and in all different cases, KKC is to be paid:
Ø Invoice issued and price received towards such bill before such provider turns into taxable i.E previous to June 1, 2016
Ø Payment acquired earlier than the service turns into taxable i.E prior to June 1, 2016 and invoice has been issued inside 14 days of the date whilst the provider is taxed for the primary time.
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Question 18. What Will Be The Pot For Determination Of Kkc Liability In Case Of Service Receiver Under Reverse Charge Mechanism?
POT in case of Reverse Charge is decided in accordance with Rule 7 of the POTR.
In terms of Rule 7 of the POTR, factor of taxation beneath opposite charge (besides associated organisations placed outside India), shall be as beneath:
Payment made within 3 months – Date of fee;
Payment no longer made within three months - Date right now following the end of three months
In case of related corporations, wherein the individual presenting the provider is placed outdoor India, POT shall be in advance of the subsequent:
Date of debit in the books of account of provider receiver;
Date of Payment
Recently a proviso has been inserted in the stated rule vide Notification No. 21/2016-ST dated March 30, 2016, which affords that in which there is trade in the liability or quantity of legal responsibility of Service tax to be paid beneath Reverse Charge, the POT may be determined as underneath:
Service has been provided and the invoice issued earlier than the date of such trade, however payment has now not been made as on such date, the POT shall be àthe date of issuance of invoice.
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Question 19. When There Can Be Change In The Liability Or Extent Of Liability Of Service Tax To Be Paid By Service Receiver Under Reverse Charge?
There can be trade in the liability or quantity of legal responsibility of Service tax to be paid via service receiver beneath Reverse Charge because of adjustments in abatement charge, composition price, change in price of Service tax, applicability of any new levy like KKC w.E.F June 1, 2016 and so on.
Question 20. Whether Cenvat Credit Of The Kkc Is Available?
The Central Government vide Notification No. 28/2016-CE (N.T.) dated May 26, 2016, has amended Rule three of the Credit Rules to provide that:
Ø A company of output provider shall be allowed to take Cenvat credit of the KKC on taxable offerings leviable beneath Section 161 of the Act;
Ø Cenvat credit of any obligation laid out in Rule 3(1) of the Cenvat Credit Rules, 2004 (“the Credit Rules”) shall now not be utilised for price of KKC;
Ø Cenvat credit score in appreciate of KKC shall be utilised best toward fee of KKC.
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Question 21. Can The Cenvat Credit Of Service Tax Be Used For Payment Of Kkc?
No, Cenvat credit of Service tax can not be used for price of KKC. Only Cenvat credit of KKC paid on input services shall be allowed for use for price of the KKC on taxable offerings supplied by using a provider provider.
Question 22. Whether The Cenvat Credit Of Kkc Is Available To A Manufacturer?
No, the Cenvat credit of KKC is not to be had to manufacturer. In phrases of amended Rule 3 of the Credit Rules, Cenvat credit of KKC paid on enter services shall be allowed to be used for payment of the KKC on taxable offerings furnished through a provider company.
Question 23. How Kkc Will Impact “make In India” And “begin Up India” Campaign Of The Government?
The KKC will have unfavourable effect on the “Make in India” and “Start up India” campaign of the Government as the manufacturers paying KKC on procurement in their input offerings would not be in a function to avail Cenvat credit of the equal and as a result could shape a part of their fee, main to increase in expenses to that extent. Further, there might be separate bills, codes, statistics & computation, followed with the aid of corresponding atypical Cenvat provisions, required to be maintained for KKC, going in opposition to the ease of doing enterprise. Thus, imposition of KKC is probable to hamper “Make in India” and “Start-up India” campaign of the Modi Government.
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Question 24. Does A Person Providing Both Exempted & Taxable Services And Reversing Cenvat Credit @ 7% Of Value Of Exempted Service Under Rule 6 Of The Credit Rules, Needs To Reverse The Kkc Also?
Yes, since the KKC is included in the Cenvat credit chain unlike SBC, therefore, Cenvat credit must be reversed inside the similar manner as turned into in advance reversed in case of Education Cess and Secondary Higher Education Cess.
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Question 25. Can Input Service Distributor (“isd”) Distribute The Cenvat Credit Of Kkc As Per Rule 7 Of The Credit Rules?
Yes, Cenvat credit of KKC may also allowed to be allotted to Units providing taxable output offerings as consistent with Rule 7 of the Credit Rules, however the correct amendment is required in this regard in Rule 7 of the Credit Rules.
Question 26. In Which Column, Kkc And The Cenvat Credit Details Of Kkc To Be Shown In The Service Tax Return?
Although the Government has prescribed the separate accounting code for KKC, however Service Tax return i.E. Form ST-three isn't amended as yet, it'll be clarified to show availment and usage of KKC one after the other in ST-three in destiny.
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Question 27. Would Rebate Be Available Of Kkc Paid On Input Services Used For Provision Of Export Of Services?
The Central Government vide Notification No. 29/2016-ST dated May 26, 2016, has amended Notification No. 39/2012-ST dated June 20, 2012 (Rebate of the responsibility paid on excisable inputs or Service tax and cess paid on all enter offerings used in offering provider exported) to insert KKC underneath the definition of “carrier tax and cess”, to permit the company of offerings to assert rebate of KKC paid on all of the input services utilized in supplying services exported in phrases of Rule 6A of the Service Tax Rules.
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Question 28. Would Refund Be Available Of Kkc Paid On Specified Services Used In Special Economic Zone (“sez”)?
Yes, the Notification No. 30/2016-ST dated May 26, 2016 has amended the Notification No. 12/2013-ST dated July 1, 2013 (Exemption on offerings acquired by way of units positioned in a SEZ or Developer of SEZ and used for their authorised operation), which permits refund of the KKC paid on the desired services to SEZ Unit or developer, on which ab-initio exemption is admissible however now not claimed and the refund quantity could be calculated as beneath:
Service tax distributed to SEZ Unit/ Developer as in keeping with Rule 7 of the Credit Rules*(zero.5+zero.Five)