Swachh Bharat Cess on Royalty Service Tax payment

[Guest]

Dear Sir,

Please explain whether Swachh Bharat Cess will leviable on Royalty Service Tax payment under Import of Services for Service receiver for the period Oct - Dec 2015

If yes then please also explain how to calculate such Swachh Bharat cess by deducting from R & D Cess or not.Please give us any references regarding this ,Thanks & regards.

[KASTURI SETHI]

Pl.intimate the date of invoice and date of payment made. However, relevant extract of FAQs issued by CBEC in Nov.,15 is appended below:-

Q.12 How will the SBC be calculated for services under reverse charge mechanism?

Ans. In case of reverse charge under section 68(2) of the Finance Act, 1994, the liability has been shifted from service provider to the service recipient. As per section 119 (5) of the Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made thereunder are applicable to SBC also. Thus, the reverse charge under section 68(2) of the Finance Act, 1994, is made applicable to SBC. In this context, to clarify, Government has issued notification No. 24/2015-Service Tax dated 12th November, 2015 to provide that reverse charge under notification No.30/2012-Service Tax dated 20th June, 2012 shall be applicable for the purpose of levy of Swachh Bharat Cess mutatis mutandis.

 

Q. 19 How would liability be determined in case of reverse charge services where services have been received prior to 15.11.2015 but consideration paid post 15.11.2015?

Ans. In respect of reverse charge mechanism, SBC liability is determined in accordance with Rule 7 of Point of Taxation Rules, as per which, point of taxation is the date on which consideration is paid to the service provider. Thus, SBC liability in such case will be 0.5% X Value of taxable service. Q.20 Does a person providing both exempted and taxable service and reversing credit

[CSSANJAY MALHOTRA]

Appropriately answered by Sh. Kasturi ji.

AI Summary

Swachh Bharat Cess on reverse-charge imported royalty services: liability arises on payment date under Point of Taxation Rules. Swachh Bharat Cess is applicable to services subject to reverse charge, including imported royalty services, by virtue of the statutory extension of reverse charge to SBC. For reverse charge transactions, SBC liability is determined under the Point of Taxation Rules: the point of taxation is the date of payment to the service provider, and SBC is to be calculated on the value of the taxable service at that time. The text does not resolve whether SBC may be deducted from other cesses.