Mr. Arun Jaitely has taken a step forward towards the development of our nation and imposed one more Cess named KKC.  Krishi Kalyan Cess (KKC) literally means a cess for the betterment of farmers. For this, Mr. Arun Jaitely, Finance minister has introduced this cess to be levied and collected in accordance with the provision of Chapter VI of Finance Act, 2015 at the rate of 0.5% on the value of taxable services over and above Service Tax and Swatch Bharat Cess. This cess is applicable with effect from 1st June, 2016.

For improving agriculture facilities, KKC would be applicable on all services (NOT ON INCOME) like Telephone Bill, Restaurant bill, Air Travel Agent etc.

KKC’s applicability purely depends upon payment made by the service recipient i.e. after 1st June, 2016 irrespective of the invoice raised before or after 1st June,2016 cases where services are provided before 1st, June,2016.

Due to this, all payments made afer 1st June, 2016 will attract KKC thereby increasing Service Tax Rate from 14.5% to 15%.

HIGHLIGTHS OF KKC

  • For promoting and financing agricultural activities, this cess is levied and collected at the rate of 0.5%on total value of services.
  • Proceeds of this cess be first credited to the consolidated fund of India and Central Government after due appropriation by parliament in law.
  • Provisions of Chapter V and Rules made therunder shall apply as same on its levy and collection as applicable on such taxable services.
  • Alike Input Credit of Swatch Bharat Cess, Input Credit of KKC would be allowed to be claimed against KKC.
  • Maintenance of separate accounts for paying KKC as per Cenvat Credit Rules.

NOTE: Credit of KKC not available to Manufacturers thereby increasing cost of manufacturers.

KKC implied and collected independent of Service Tax i.e. charged separately after Service Tax.

With this introduction, Krishi kalyan Surcharge has also been announced in order to reduce black money.

This will be imposed on secret income at the rate of 7.5% to be used solely for farming and countryside economy. This Surcharge totally different from KKC.