The Budget 2016 has proposed to introduce Krish Kalyan cess of 0.5% on service tax for the welfare of farmers. That means, the gross service tax burden on distributors commission is likely to go up by 50 basis points i.e. from 14.5% to 15%.
In his Budget 2016 speech, Union Finance Minister, Arun Jaitley said, “I propose to impose a cess called the Krishi Kalyan Cess at 0.5% on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The cess will come into force with effect from 1 June 2016. Input tax credit of this cess will be available for payment of this cess.”
Earlier in November, the government had imposed 0.5% Swachh Bharat cess on service tax which had raised the service tax from 14% to 14.5%.
