Swachh Bharat Cess shall be levied on all the taxable services at the rate of 0.5% in accordance with the provisions of Chapter VI of the Finance Act, 2015. Let us take a look at the example on SBC on Import Services.
Swachh Bharat Cess on Import Services
As per Point of Taxation rules, since SBC levy has come for the first time, all services are being subjected to Swachh Bharat Cess for the first time. Swachh Bharat Cess is a new levy, which was not in existence earlier. Hence, as per the Rule 5 of the Point of Taxation Rules, 2011 would be applicable in this case. Therefore, in cases where payment has been received, and invoice is raised before the service becomes taxable, i.e. before 15th November 2015, there is no liability of Swachh Bharat Cess. In cases 5 where payment had been received before the service became payable and invoice are raised within 14 days, i.e. up to 29/11/2015, even then the service tax liability does not arise. SBC will be receivable on services which are provided on or after 15/11/2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov 2015 but payment is received before that date and invoice in respect of such service is not issued by 29th Nov 2015.
Mr. Minguk (Out Side India) raised an invoice to a CA expert on 30/10/2015. CA expert accounted that invoice on 20/11/2015 and paid the service tax on import services @ 14%. He made a payment to the vendor on 24/11/2015. Is he required to pay Swachh Bharat cess on the same?
Yes, The Point of Taxation for the payment of service tax on RCM or import of service is the date of payment. So, Mr.Minguk you have to pay Swachh Bharat cess on that.
[Rule 5] Payment of Tax in case of New Services
In a case of new services which was previously not covered due to negative list or exemption notification and is taxed for the first time.
- No tax shall be payable to the extent the invoice issued and the payment received for such invoice before such service became taxable.
- No tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within 14 days of the date when the service is taxed for the first time.( receipt date- before levy, invoice date- within 14 days from levy).
As per [Rule 5 ] Payment of Tax in a case of New Services – Pont of Taxation Rule, 2011, the payment has been made AND invoice is raised BEFORE the service becomes taxable. It means the invoice is raised on 15th November, so Swachh Bharat Cess is not liable in this case. In a case where payment had been received before the service became taxable AND invoice is raised within 14 days i.e., 29th November then service tax liability does not arise. But As per above the case, Mr. Minguk have to pay Swachh Bharat Cess.
Note: Swachh Bharat Cess with effect from 15th November 2015.
For more regarding SBC refer, Swachh Bharat Cess FAQ