Swachh Bharat Cess introduced by the prime minister of India was an initiative to bring about cleanliness in the country. Likewise, Krishi Kalyan Cess was launched in order to contribute extra support to farmers for producing agricultural activities. The finance minister suggested the Krishi Kalyan Cess in February 2016 Budget. The KKC was implemented on 1 June 2016. KKC adds on extra 0.5 per cent to people service tax load. After the new addition, the service tax rate on all the services one use reaches 15 per cent.
Krishi Kalyan Cess was introduced to meet the needs of the farmer and for enhancing farming and cultivation facilities. Let’s discuss KKC in brief points.
- ‘Krishi’ indicates ‘farming’ and ‘Kalyan’ indicates ‘welfare’.The Krishi Kalyan Cess is a cess that will be taxed and imposed in agreement with the terms mentioned in Chapter VI of the Finance Act 2015. A Service Tax on each taxed service at a rate of 0.5 per cent.
- The idea to introduce Krishi Kalyan cess is to contribute timely and fair credit to farmers to reach generation and consumption costs.KKC also offers personal loan or credit against the assets saved in farmers own godowns, premises and warehouses which serve farmers avoid suffering in the trading of produced goods and help them to compensate the loan(Personal loan and equipment financing ) dues.
- The documents required for taking loans are the ID proof which can be Aadhar card, Voter ID, Photo ration card etc. The Residence proof that can be a farmers ration card and the land ownership proof- revenue receipt or the purchase receipt etc.
- The recommended rate of the Goods and Services Tax (GST) and GST Registration is approximately 17-18%. So it can be observed that the service tax rate is being fairly raised to reach the suggested level of GST. Krishi Kalyan Cess has been made relevant from the 1st of June 2016.
- Krishi Kalyan Cess is not relevant on Services stated in mega exemption list and negative list according to the notification No. 22/2015, KKC would not be suitable on services spared from a fee of service tax.
- KKC is eligible for Cevant credit. Unlike all another cess, cenvat credit of KKC was free under the Cenvat Credit Rules, 2004. This means a company can demand the refund of Krishi Kalyan cess in service tax. Though, when GST was started companies had millions of KKC credit lying in their books.
- The people who are eligible for Krishi Kalyan Cess are :
- Creditworthy farmers
- Tenant farmers
They have a great record in farming crops like food grains, oilseeds, pulses, cereals etc. They are produced and stored in warehouses, cold storage, godowns etc. Farmers planting and cultivating vegetables and fruits in centres are stored in cold storage which easily available.
- As per the development in the arena of KKC, the goverment has launched Kisan Credit Card that is a specifically devised credit card for farmers. The facility of this card is to provide problem-free and accessible credit to meet day to day farming necessities of farmers.
- The calculation KKC is way similar to service tax calculation. Accordingly, KKC would be imposed on an equal way as taxable amount as service tax. KKC is not to be calculated on the basis of the taxable value of the service rendered. Say for an example :
Krishi Kalyan Cess calculation
For a service worth Rs. 200, Service Tax will be Rs. 28 at a 14% rate and Swachh Bharat Cess will be Rs. 0.50 at 0.5%. Similarly, Krishi Kalyan Cess will be Rs. 0.50 at 0.5%.So the total chargeable amount will be Rs. 221.
- The KKC apply on Works Contract Service is the cost of services would be determined as per Rule 2A of Service Tax Rules, 2006. Tax needs to be implemented on the cost so appeared at the rate of 15%. The effective rate of tax in the case of fundamental works and other than fundamental work will be 6% and 10.5% individually.
- Point of taxation in KKC is comprised under Rule 5 of Point of taxation Rules 2011. POT in case of a new levy on services shall be governed by Rule 5 in 2011. As per rule 5 vide Notification No.10/2016-ST dated March 1, 2016, is observed only in the following situation i.e. in some cases the kkc shall not be payable and in all other cases, KCC is to be paid.
- Invoice assigned and amount obtained upon invoice and before the services, it becomes taxable that is before to 1st June 2016.
- Payment accepted before the services it displays to be taxable that is before to 1 st June 2016 and invoice has been originated within 14 days and the service is taxed on the date when it is a 1st time originated.
The motive behind the intrusion of Krishi Kalyan Cess is great with an intention to develop the overall agricultural economy that provides about 16% GDP of India. The government required to present a suitable incentive for plans. KKC is expected to hinder these actions by combining the value of goods and as a result, the prices will increase.
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