As per the recent Service Tax(ST) notification circulars, vide Notification No. 21/2015-ST & Notification No. 22/2015-ST dated November 6, 2015, government has appointed November 15, 2015 as the date from which, “Swachh Bharat Cess” (SB Cess) at 0.5% of the service value, has to be levied on the value of all taxable services over and above the prevailing service tax rate i.e. the effective rate of Service Tax including SB cess will be 14.5% w.e.f November 15, 2015.
How are Housing societies impacted by this?
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If your monthly invoice value is more than Rs 5,000/-, you must be collecting & paying service tax( (Refer Jan 2014 Circular on Service Tax on RWAs for more details) at the rate of 14%.With the SB cess in place, the revised Service Tax rate shall now be 14.5 %. This is applicable on Invoices with Invoice date on or after 15th November 2015.
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You would have to pay an additional of 0.5% as SB cess to your vendors, for any services rendered by them that come under service tax ambit.
What do you need to do?
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Swachh Bharat Cess must be charged as a separate line item on the Invoice, wherever applicable, as well has to be accounted for separately. Hence, if you are using any sort of “manual” invoicing, where Service tax is added manually, you need to add another line item of Swachh Bharat Cess of 0.5% for Invoices generated on or after 15th November.
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Swachh Bharat Cess is payable to Govt., however it cannot be claimed as an Input Credit. Hence, you will be charging your Residents now at 14.5% (if applicable) and paying your Vendors a total Service tax of 14.5%; however, the 0.5 % SBC will not be allowed as input credit against the service tax liability.
Using Commonfloor Groups’ Smart Accounting? We’ve got you covered:
For all Invoices dated after 15th November, and with Service tax applicable, we will automatically add another line item for Swachh Bharat Cess of 0.5% to such Invoices. No effort needed from your side!
Above change will be made to:
- All future invoices already created in the system OR
- Invoices raised after 15th November OR
- Recurring Invoices ( Smart Invoicing as we call it)
Please do cross-check the implications with your CA/ Auditor as well to ascertain the changes for any specific cases applicable for your society. Feel free to reach out to us, if you need any further information/ help from our side.
Wishing you all a very happy & safe Diwali once again!
Regards,
Team CommonFloor Groups.
P.S : In case you are not using Commonfloor Money Manager, you should certainly reconsider it and ask us for a demo to your association.
