Now pay extra tax for ‘Swachh Bharat’

New Delhi, Nov 15:Travel in railways’ upper class categories has become costlier as a service tax levy of 14 per cent and a Swachh Bharat cess of 0.5 per cent became effective from Sunday, Nov 13.

“The railways charge service tax and cess only on 30% of the total fare”. However, the same has been imposed on all taxable services.

In this regard, it is clarified that answers to the above queries are in the provisions of subsection (5) of section 119 of the Finance Act, 2015 by which all the provisions of service tax as contained in Chapter V of the Finance Act, 1994 have been made applicable to Swachh Bharat Cess. The notification on the Swachh Bharat cess doesn’t clearly set out the value and rate at which it would be levied in sectors such as air travel, where presumptive taxation is followed.

In a circular issued to all head of departments and assistant commissioners, the BMC has asked them to collect 14.5 per cent service tax (including education cess) on all taxable municipal services from November 15.

The Swachh Bharat Cess is expected to yield the government an additional about Rs 400 crore during the remainder of the current fiscal year, which will be go to the Urban Development Ministry and the Ministry of Drinking Water and Sanitation to fund the cleanliness drive across the country. This will effect in a few increase in the bills for taxable municipal services. Therefore, in case where payment has been received and invoice is raised before the service becomes taxable, i.e., prior to 15th November, 2015, there is no lability of Swachh Bharat Cess.