The Finace Act, 2016, has increased the Service Tax by including a nee cess by the name Krishi Kalyan Cess, which is applicable w.e.f. 01-06-2016. The effective rate of Service Tax for all new services provided on or after 01-06-2016 is given below:
Service Tax : 14.00%
Swatch Bharath Cess : 0.50%
Krishi Kalyan Cess : 0.50%
Effective Rate : 15.00%
The bifurcation of three elements as shown above should be clearly shown in the invoice. CENVAT Credit will be available on Krishi Kalyan Cess. But for Swatch Bharath Cess, Cenvat Credit will not be available.
The treatment of invoices outstanding as on 31-05-2016 is given below:
| TREATMENT OF INVOICES PENDING AS ON 31-05-2016 | ||||
|
Scenario |
Service provided before 1st June | Invoice is raised before 1st June | Payment is made before 1st June |
Applicability of Krishi Kalyan Cess |
|
1 |
Yes | Yes | Yes | No |
|
2 |
Yes | No | Yes |
No |
|
3 |
Yes | Yes | No |
Yes |
|
4 |
Yes | No | No |
Yes |
In order to avoid the effect of increase in service tax, it’s advisable to make the payment for services received on or before 31-05-2016.
Karthik & Sunil 
Reblogged this on karthikandsunil.
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