Krishi Kalyan is a cess which came into existence effective 1st June. This will be levied on all taxable services and with the advent of Krishi Kalyan the overall taxes on services will be levied hence forth at 15%.
About Krishi Kalyan:
A cess will be levied only on services and not on income of individuals and amount collected will be spent only for that purpose and will not be utilized for a different one.
Krishi Kalyan was announced by our Finance Minister during the recent budget session of 2016. This will be levied at 0.5% on Service Tax. This is introduced for developing and promoting agriculture initiatives. Due to this increase some of the regular services which we use like Broadband bills, Telephone bills, Hotel bills etc will become dearer effective 1st June. As Swachh Bharat Cess is also being levied at 0.5% , the overall taxes on services will be levied at 15%.
Assuming if we get a bill of Rs.1000 for the telephone services used in the month of May, the new billing structure will appear as below:
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This cess will be applicable even if the services is availed prior to 1st June but the services bill is generated after the implementation date. There may also be instances wherein the bill also be generated before 1st June but if the payment is made after the implementation date still it attracts Krishi Kalyan cess.
Even though the new cess benefits the agriculture which is the backbone of our economy , this new tax actually eats up into common man earnings. Whilst we welcome the new initiative, our government can give a thought to reduce the service tax which has scaled upto 14%. This will help to strike a balance between developing agriculture and taking care of the welfare of the common man.
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