Swachh Bharat Cess is an additional levy of 0.50% on all the taxable services with effect from 15thNovember, 2015. This Swachh Bharat Cess will be added in the service tax rate which makes effective service tax rate of 14.50% and all the taxable services which will be provided on or after 15th November, 2015, will be chargeable with new service tax of 14.50% including Swachh Bharat Cess. This additional levy translates into tax of 50 paise on every hundred rupees worth of taxable services.
How to Calculate Swachh Bharat Cess ?
Swachh Bharat Cess will be levied only on the taxable services i.e. not on exempted services and non-taxable services aka in negative list. Further, the manner of calculation of Swachh Bharat Cess will be same as of service tax i.e. if abatement is there for any services under service tax act, than the same rule shall be applicable for calculating Swachh Bharat Cess. For example restaurants or eating joints having air-conditioning facility enjoys abatement of service tax of 60% i.e. service tax is levied only 5.60% (40% of 14%). Thus the same principle goes with Swachh Bharat Cess and the additional levy will be 0.20% (40% of 0.50%) which makes the effective service tax rate of 5.80%.
Similarly in case of reverse charge mechanism, the person liable to pay service tax is also liable to pay Swachh Bharat Cess and is case of Goods Transport Agency (GTA) which pays service tax at abated rate of 4.2% (30% of 14%), Swachh Bharat Cess will also be payable at abated rate of 0.15% (30% of 0.50%), making effective rate of service tax of 4.35%.