As a part of the Union Budget, Krishi Kalyan Cess, which is said to be imposed on all the taxable services, will come into effect from June 1st.
NDA government in the last year, had imposed Swachh Bharat cess of 0.5% on service tax, to fund Swachh Bharat Abhiyan, a pet project of the Prime Minister.
Later in the year, the government has hiked the service tax from 12.36 to 15% (including the two cesses). The parliamentary standing committee on finance, recently said that, the money collected by way of cess was not being utilized for the designated purpose.
The Krishi Kalyan Cess of 0.5%, will now hike the costs of the several services like beauty salons, spas, gyms, courier services, credit and debit card-related services, chartered accounts, architects, insurance and demands raised by real estate builders for housing projects, among others.
Imposing cess is the major route, through which Modi government is trying to generate the revenue, when required. It has been claiming the credit for accepting 14th Finance Commission recommendations, to increase states’ share in Central taxes by 10% to a record 42%.
Even then, the Central government does not share the revenue earned through cess with the states, claiming that revenue from cess, will be used for financing initiatives to improve agriculture and for the welfare of farmers.
By Phani Ch
