As you know the Central Government vide Notification No. 21/2015-ST dated November 6, 2015, the Central Government has fixed November 15, 2015 as the date on which Chapter VI (Section 199) of the Finance Act, 2015 [Swachh Bharat Cess (SBC)] shall come into effect. Further, vide another Notification No. 22/2015-ST the Central Government provided the effective rate of SBC as 0.5 per cent. Consequently, effective Service Tax rate would be 14.5 per cent w.e.f. November 15, 2015. It is amply clear that that SBC shall be charged on the value of taxable services and not on tax component.
Now, the question arises what will be the value of taxable service in case abatement [please refer Notification No. 26/2012] is also provided by another exemption notification for such service or where the Service provider has an option to pay Service Tax with an alternative rates (please refer Rule 6(7), 6(7A), 6 (7B) and 6(7C)].
The Central Board of Excise & Customs (CBEC) has issued the following notifications in order to provide clarity on levy of SBC:
| Notification No. and date | Relevant Extract | Comments |
| No. 23 /2015-Service Tax dated November 12, 2015 | “Provided further that Swachh Bharat Cess shall be leviable only on that percentage of taxable value which is specified in column (3) for the specified taxable services in column (2) of the Table in the notification No. 26/2012-Service Tax, dated 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 468 (E), dated the 20th June, 2012.
Explanation.- It is hereby clarified that value of taxable services for the purposes of the Swachh Bharat Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.” |
Now, it is amply clear that SBC (@0.5 per cent) shall be levied on abated value, i.e. after considering the abatement provided under the Finance Act, 1994. |
| No. 24 /2015-Service Tax dated November 12, 2015 | “… hereby provides that notification No. 30/2012 – Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20th June, 2012 shall be applicable for the purposes of Swachh Bharat Cess mutatis mutandis”. | In case of reverse charge wherein the Service Recipient is liable to pay Service Tax, SBC shall also be payable along with Service Tax liability. |
| No. 25 /2015-Service Tax dated November 12, 2015 | “The person liable for paying the service tax under sub-rule (7), (7A), (7B) or (7C) of rule 6, shall have the option to pay such amount as determined by multiplying total service tax liability calculated under sub-rule (7), (7A), (7B) or (7C) of rule 6 by 0.5 and dividing the product by 14 (fourteen), during any calendar month or quarter, as the case may be, towards the discharge of his liability for Swachh Bharat Cess instead of paying Swachh Bharat Cess at the rate specified in sub-section (2) of section 119 of the Finance Act, 2015 (20 of 2015) read with notification No.22/2015-Service Tax, dated the 6th November, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 843 (E), dated the 6th November, 2015, and the option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances.” |
If Service Tax is payable at an alternative rate, SBC will also be computed to the proportion of such alternative rate.
For instance if Service Tax is payable @ 1.4 per cent of base fare in case of international booking then SBC would be computed as under:
0.5×1.4/14=0.05
The Service Sax would be payable @ 1.45 per cent
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