Krishi Kalyan Cess to be levied on all services from June 1

Not like eating out, or travelling was any cheaper; thanks to a growing list of imposed taxes. Now the government plans to impose a new component—Krishi Kalyan Cess (KKC)—of 0.5 percent on all taxable services, with effect from June 1. With this, the total incidence of Service Tax will go up to 15 percent.

Last year, the government had imposed Swachh Bharat Cess of 0.5 percent on Service Tax. The levy will burden the consumers and their monthly budgets, even more. The total service tax outgo has increased from 12.36 percent to 15 percent within one year, “and will contribute to inflationary pressures,” Amit Maheshwari, Partner, Ashok Maheshwary & Associates, said.

The additional cess will be levied on all taxable services and is aimed at financing and promoting initiatives to improve agriculture in the country. Maheshwari pointed out that in cases where invoice has been issued prior to levy of this cess, but the payment is due as on date of levy, then this cess will be applied on the payment. “Thus the Cess would be leviable on outstanding balances as on May 31, 2016.

This may prove to be regressive for service providers as it may not be possible to convince all the debtors particularly for the dues outstanding for relatively longer period and they may have to bear the cost for this extra levy,” he said.