The Indian Government is making strides towards improving the country's hygiene and sanitation. It does so with its recent introduction of a new service tax, Swachh Bharat Cess — which applies at a fixed rate of two per cent on value-based services rendered within India's territory.

The aim is to promote environmental awareness while providing for finances needed to drive development through various programs, including but not limited to that initiated by "Swachh Bharat Abhiyan".

This unique cess whose yields are earmarked for development purposes only gets credited directly into India's Consolidated Fund after collection from all taxable providers/services within Indian territories without causing any effect whatsoever on the existing tax or cess framework. Swachh Bharat Cess applicability is on all taxable services.

Purpose of Swachh Bharat Cess

Swachh Bharat Cess was introduced on 15th November 2015, with a tax rate of 0.5% on all taxable services. The cess is levied over and above the existing service tax, and the revenue collected from it is used exclusively for the Swachh Bharat Abhiyan.

The primary objective of Swachh Bharat Cess is to provide financial resources for the Swachh Bharat Abhiyan. This organisation aims to build toilets, promote sanitation and hygiene, and create awareness about cleanliness in the country.

Swachh Bharat Cess applicability is on all taxable services, including restaurants, hotels, airlines, telecommunication services, advertising, and broadcasting services. It is also levied on services provided by government or local authorities and services provided by individuals and companies.

Collection and Payment of Swachh Bharat Cess

Swachh Bharat Cess is collected and paid in the same manner as service tax. The service provider is responsible for collecting the cess from the service recipient and paying it to the government. The cess is then deposited in a separate account maintained by the government, which is used exclusively for the Swachh Bharat Abhiyan.

Service recipients are required to pay Swachh Bharat Cess in addition to the existing service tax, which increases the cost of services. The tax is not eligible for the input tax credit, which means that service providers cannot claim a credit for the cess paid.

Exemptions and Abatement

Swachh Bharat Cess is exempted from services provided to the government, diplomatic missions, and United Nations organisations. In addition, certain services such as healthcare, education, and transportation are eligible for abatement, reducing tax liability.

Conclusion

Swachh Bharat Cess is a unique tax initiative the Government of India introduced to support the Swachh Bharat Abhiyan. While it increases the cost of services for the service recipients, it provides financial resources to promote cleanliness and hygiene across the country. The government has also taken steps to exempt certain services and provide abatement to reduce the tax liability for eligible services.

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Frequently Asked Questions

1. What is the cess tax for Swachh Bharat?

Swachh Bharat tax is levied on all taxable services in India at the rate of 0.5% of the total taxable value of the service.

2. What is the applicability of SBC cess?

Swachh Bharat Cess is a tax that applies to a broad range of taxable services, such as restaurants, hotels, airlines, telecommunication services, advertising, and broadcasting services. It is also levied on services provided by the government, local authorities, individuals, and companies.

3. What is the date of implementation of SBC?

Swachh Bharat Cess was introduced on 15th November 2015.

4. Why has SBC been imposed?

The SBC was imposed to generate funds for the Swachh Bharat Abhiyan, a nationwide campaign launched by the Indian government to improve cleanliness and hygiene levels, promote better sanitation practices, construct toilets, and raise awareness about the importance of maintaining cleanliness in the country.