In order to finance and promote the initiatives and to improve welfare of the farmer and agriculture, the Government of India has introduced a new cess namely “Krishi Kalyan Cess”.
The Krishi Kalyan Cess (KKC) will be levied @ 0.5% on the value of all taxable services.
This is effective from 1st June 2016.
In view of the same, the effective rate of Service tax will be increased from 14.5% to 15%.
This levy of Krishi Kalyan Cess is in addition to Service Tax and Cess already being charged.
As per the announcement , the KKC is Cenvatable. But the relevant amendment to Cenvat Credit rules is not yet done and expected in due course.
The Illustration below will show how the KKC to be calculated :-
Value of Taxable Service (A) Rs. 10000/-
Add :- Service Tax @ 14% on (A) Rs. 1400/-
Add :- Swatch Bhrarat Cess @ 0.5%
(SBC) on (A) Rs. 50/-
Add :- KKC @ 0.5% on (A) Rs. 50/-
Total Rs. 11500/-
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