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Krishi Kalyan Cess not to be levied on service provided before 31-05-2015

Central Government has vide Notification No.35/2016-Service Tax dated 23.06.2016, has exempted taxable services from levy of Krishi Kalyan Cess (“KKC”) if the following two conditions are satisfied:

  • Where invoices have been raised prior to 01.06.2016; and
  • Where provision of service has been completed prior to 01.6.2016.

Accordingly, the concern of the industry that Krishi Kalyan Cess shall be levied on the opening debtors i.e. remaining unpaid as on 30.05.2016 has been duly answered and no KKC shall be levied on such amounts.

It is also important to mention that the provision of service should be completed in total and no relief in terms of proportionate completion is mentioned in the notification.

Thus, the levy of KKC can be explained as under:

 

Situation Services provided Invoice Issued Payment received Whether KKC applicable
Situation A Before 01.06.2016 Before 01.06.2016 Before 01.06.2016 No (rule 5)
Situation B Before 01.06.2016 Before 01.06.2016 After 31.05.2016 Exempted (35/2016)
Situation C Before 01.06.2016 After 31.05.2016 After 31.05.2016 Yes
Situation D Before 01.06.2016 On or before 14.06.2016 Before 01.06.2016 No (rule 5)
Situation E Before 01.06.2016 After 14.06.2016 Before 01.06.2016 Yes
Situation F After 31.05.2016 On or before 14.06.2016 Before 01.06.2016 No (rule 5)
Situation G After 31.05.2016 After 14.06.2016 Before 01.06.2016 Yes
Situation H After 31.05.2016 Before 01.06.2016 Before 01.06.2016 No (rule 5)
Situation I After 31.05.2016 Before 01.06.2016 After 31.05.2016 Yes
Situation J After 31.05.2016 After 31.05.2016 After 31.05.2016 Yes

Notification No. 35/2016-Service Tax

New Delhi, the Dated: 23rd June, 2016

G.S.R. —(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), read with sub-section (5) of section 161 of the Finance Act, 2016 (28 of 2016), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services with respect to which the invoice for the service has been issued on or before the 31st May, 2016, from the whole of Krishi Kalyan Cess leviable thereon, subject to condition that the provision of service has been completed on or before the 31st May, 2016.

[F.No. B-1/21/2016 – TRU]

(Mohit Tiwari)

 

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