Krishi Kalyan Cess Applicability for CA IPCC CA Final Nov 2016 and May 2017 exams has already been clarified the ICAI. Students raise queries regarding the applicability for Krishi Kalyan Cess, Calculation of Krishi Kalyan Cess, Krishi Kalyan Cess Applicability and Taxation. In this article, we will cover everything that a student needs to know about the Krishi Kalyan Cess that was recently introduced in the parliament. The amounts collected on KKC will be utilised for Agricultural and Farmer welfare in India.
Krishi Kalyan Cess Notification
The Krishi Kalyan Cess was notified by the Central Board of Direct Taxes on 26th May 2016. As per this Notification, the Krishi Kalyan Cess will be applicable with effect from 1st June, 2016.
This Notification has been released by the Department of Finance under the authority of Ministry of Finance.
Krishi Kalyan Cess Applicability
The Applicable Date of Krishi Kalyan Cess has been clearly mentioned in the Notification as 1st June 2016. This means, starting from this date, The Cess will be levied on all applicable services in addition to Service Tax.
Krishi Kalyan Cess Applicability for CA IPCC and Final
As the effective date of Krishi Kalyan Cess is 1st June 2016, it is not applicable for November 2016 CA IPCC and CA Final Exams. However, Krishi Kalyan Cess will be applicable from May 2016 exams.
What is the Rate of Krishi Kalyan Cess
The Proposed rate of Krishi Kalyan Cess as per the Notification is 0.5%. This takes the total Service Tax Rate to 15% now.
Krishi Kalyan Cess Cenvat Credit
Notification no. 28/2016- Central Excise (N.T.) allows CENVAT credit of KKC paid on input services to a service provider. The notification further provides that CENVAT credit of any other duty will not be allowed to be utilized for payment of Krishi Kalyan Cess and only CENVAT credit of KKC paid on input services can be utilized only for payment of KKC on output services.
A manufacturer is not eligible to claim CENVAT credit of KKC. It is not completely clear how CENVAT credit of KKC on input services will be available for a taxpayer who is manufacturer as well as service provider.
Krishi Kalyan Cess Calculation
The Krishi Kalyan Cess calculation is similar to that of regular Service Tax calculation. The KKC shall be levied on the taxable value of the service. You should note that KKC is not calculated on the Service Tax amount, but, shall be levied on the entire taxable value of the service. This can be explained with the following example.