Accounting Code for Payment of Krishi Kalyan Cess

Accounting codes have been allotted by the Office of the Controller General of Accounts for the new Minor Head “507-Krishi Kalyan Cess” and new Sub-heads as under:

S.No Krishi Kalyan Cess
(Minor Head)
Tax Collection Other Reciepts
(Interest)
Deduct Refunds Penalties
1 0044-00-507 00441509 00441510 00441511 00441512

CBEC Circular No. 194/04/2016-ST (No. 354/31/2016-TRU) Dated the 26th May, 2016

Subject: Accounting code for payment of Krishi Kalyan Cess – regarding.

Chapter VI of the Finance Act, 2015 will come into effect from 1st June, 2016. Krishi Kalyan Cess is leviable on all taxable services, other than services which are fully exempt from Service Tax or services which are otherwise not liable to Service Tax under section 66B of the Finance Act, 1994, at the rate of 0.5%.

2.Accordingly, accounting codes have also been allotted by the Office of the Controller General of Accounts for the new Minor Head “507-Krishi Kalyan Cess” and new Sub-heads as under:

S.No Krishi Kalyan Cess
(Minor Head)
Tax Collection Other Reciepts
(Interest)
Deduct Refunds Penalties
1 0044-00-507 00441509 00441510 00441511 00441512

4.All concerned are requested to acknowledge the receipt of this circular.

5.Trade Notice/ Public Notice to be issued. Wide publicity through local news media including vernacular press may be given.


Important Points to be considered about Krishi Kalyan Cess

  • Krishi Kalyan Cess is proposed to be levied with effect from 1st June, 2016 on any or all the taxable services at the rate of 0.5% on the value of such taxable services. By introducing such levy the effective rate of Service tax will increased from 14.50% to 15% (14% ST+ 0.5 Swachh Bharat Cess + 0.5% Krishi Kalyan Cess).
  • As per TRU letter No. D.O.F. No.334/8/2016-TRU dated 29-02-2016 the Credit of Krishi Kalyan Cess paid on input services shall be allowed to be used for payment of such proposed Cess.
  • Krishi Kalyan Cess would be calculated in the same way as Service tax is calculated. Therefore, Krishi Kalyan Cess would be levied on the same taxable value as service tax. Krishi Kalyan Cess is not to be calculated on Service Tax but on the taxable value of the service provided.
  • Krishi Kalyan Cess would be levied, charged, collected and paid to Government independent of Service Tax. This needs to be charged separately on the invoice, accounted for separately in the books of accounts and paid separately under separate accounting code.
  • Krishi Kalyan Cess is not applicable on Services mentioned in “Negative List” and “Mega Exemption List”. As per the Notification No. 22/2015-ST Krishi Kalyan Cess would not be applicable on services exempted from levy of service tax. Rule 5 of Point of Taxation Rules’ 2011 need to be referred for its applicability in case of ongoing contracts on 01.06.2016. Thus, if payment is made before 01.06.2016 then this cess is not applicable.
  • Taxable Services, on which service tax is leviable on a certain percentage of value of taxable service, will attract Krishi Kalyan Cess on the same percentage of value as provided in the Notification No.26/2012-Service Tax dated 20th June, 2012. So, this notification would apply for Krishi Kalyan Cess also in the same manner as it applies for Service Tax.

For instance in case of Renting of Motor Cab Service, it would be 15%*40%= 6.00%.

  • Krishi Kalyan Cess would be applicable on all taxable services. Hence, Krishi Kalyan Cess is payable along with service tax on the services availed and covered under reverse charge mechanism.
  • In case of reverse charge services, point of taxation as per Rule 7 of Point of Taxation Rules, would be the date on which consideration is paid to service provider. Hence, in such case Krishi kalyan Cess would be payable.
  • The cenvat credit of Krishi Kalyan Cess shall be available and shall be utilized only for the payment of Krishi Kalyan Cess. Thus, separate accounts needs to be maintained.
  • Refund of this Krishi Kalyan Cess shall also be allowed as the cenvat credit is there. Further, refund of this cess shall be allowed to Exporter of Service as well as Exporter of Goods as there is no restriction of its availment. Suitable amendment is awaited in CCR’2004 as well as refund notifications.
  • Krishi Kalyan Cess vs. Krishi Kalyan Surcharge

Krishi Kalyan Cess is different from the Krishi Kalyan Surcharge which is announced by the Government in the same Union Budget, 2016-17. Krishi Kalyan Cess is leviable on all taxable services whereas Krishi Kalyan Surcharge is levied @ 7.5% on undisclosed income under Income Tax Act, 1961.

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