In a bid to provide a boost to the clean India initiative, the government has decided to impose a 0.5 percent cess on all taxable services which are presently liable to service tax, to fund the Swachh Bharat programme. This tax will come into effect from November 15, 2015.
Finance Minister Arun Jaitley in Budget 2015-16 had proposed to levy a Swachh Bharat cess of up to 2 percent 'on all or certain services, if need arises”. The decision to impose 0.5 percent cess will translate into a tax of 50 paise on every Rs 100 worth of taxable services. The additional cess would be over and above the 14 percent Service Tax rate which is already being levied and may yield the government an additional about Rs 400 crore during the remainder of the current fiscal. The government had in Budget 2015-16 estimated to collect over Rs 2.09 lakh crore from service tax.
Although finance minister Arun Jaitley had not announced the list of services that would face the latest cess, but the government has opted for an across-the-board load on consumers. Everything from mobile bills to eating out in air-conditioned restaurants, a visit to a spa, air travel, dry cleaning charges, banking and coaching classes fees are set to get more expensive with the government’s decision.
The proceeds from this cess will be exclusively used for Swachh Bharat initiatives. Swachh Bharat is among the major initiatives of the Modi government, which has embarked on a major drive to ensure cleanliness across the country.