Levy of Krishi Kalyan Cess (KKC) under Service Tax

Levy of Krishi Kalyan Cess (KKC) under Service Tax and Applicability for CA Final and CA IPCC Nov 2016 Exams. Krishi Kalyan Cess is not applicable for CA Final nov 2016 Exams. The Finance Bill 2016 had imposed KKC at 0.5% on all or any of the taxable services. The levy of KKC has become effective from 01.06.2016. Therefore, after introduction of KKC, the effective rate of service tax has become 15% post 01.06.2016. Now check more details about Levy of Krishi Kalyan Cess (KKC) under Service Tax and applicability for CA Exams from below…

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Levy of Krishi Kalyan Cess (KKC) under Service Tax

1. CENVAT Credit Rules, 2004 [CCR] amended

  • (a) CENVAT credit of KKC paid on taxable services has been allowed to an output service provider vide new rule 3(1a).
  • (b) CENVAT credit other than KKC credit cannot be used for paying KKC vide new proviso (tenth) to rule 3(4).
  • (c) CENVAT credit of KKC can be used only for payment of KKC vide new clause 3(7)(d).

Must Read – Krishi kalyan cess & Infrastructure cess With Summary

2. Reverse charge provisions made applicable to KKC

Provisions of reverse charge will be applicable for the purposes of KKC mutatis mutandis.

3. Exempted services exempted from KKC also

  • (a) Taxable services which are exempted from the whole of service tax by a notification or special order or otherwise not leviable to service tax under section 66B of the Finance Act, 1994, are exempted from KKC.
  • (b) Value of taxable services for the purposes of KKC will be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.
  • (c) KKC will be leviable only on the abated value of taxable service.

4. Export rebate allowed on KKC

KKC paid on all services used in providing services which are exported in terms of rule 6A of the Service Tax Rules will be entitled for rebate.

5. Refund allowed of KKC paid on specified services used in SEZ

SEZ Unit or the Developer has been enabled to claim refund of the KKC paid on the specified services on which ab-initio exemption is admissible but not claimed.

6. KKC has been included in composition scheme for payment of service tax

Alternative rate for payment of KKC in case of air travel agents, life insurance, foreign exchange and lottery will be determined by multiplying total service tax liability calculated under rule 6 by effective rate of KKC (i.e., 0.5) and dividing the product by rate of service tax specified in section 66B (i.e., 14) of the Finance Act, 1994. This has been done by inserting a new sub-rule (7E) in rule 6 of the Service Tax Rules, 1994.

7. Accounting Code for payment of KKC specified

Accounting codes have been allotted by the Office of the Controller General of Accounts for the new Minor Head “507-KKC

Note: For November, 2016 examination, the amendments made vide the Finance Act, 2015 as well as Notifications and circulars issued upto 30.04.2016 are relevant. Therefore, provisions relating to KKC will not be applicable for November, 2016 examination as the same have become effective from 01.06.2016. However, it may be noted that the same will be applicable from MAY, 2017 examination onwards.

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