Users of “elite” services including telecommunications, insurance, manpower recruitment agencies, hotels and restaurants above a certain threshold and business auxiliary services among others may have to shell out more in the form of Swachh Bharat cess.
The revenue department is preparing a list of services which will attract the additional 2 per cent cess provided for in the Budget 2015-16, over and above the proposed 14 per cent, official sources told The Indian Express.
“A one per cent increase in service tax results in an additional mop up of Rs 12,500 crore. The top 10 services – the elite services—generate the maximum revenue and therefore we are considering subjecting them to the additional levy,” the sources said.
In order to promote cleanliness of households and environment, apart from increasing the clean energy cess on coal from Rs 100 to Rs 200 per metric tonne of coal, finance minister Arun Jaitley announced in the Budget 2015-16, “an enabling provision to levy Swachh Bharat cess at a rate of 2 per cent or less on all or certain services if need arises,” to be effective from a date to be notified.
The minister has said that the resources generated from the cess will be utilised for financing and promoting initiatives towards Swachh Bharat.
The top 10 services including maintenance and repairs; telecommunication including telegraph, telephone, telex, fascimile, leased circuit; manpower recruitment agency; insurance auxiliary services; construction of residential complex; business support; renting of immovable property; information technology software for use in course or furtherance of business; and management consultants contribute over 50 per cent of the total revenue generated from services tax.
The sources said that hotels which charge tariff above Rs 2,000 per day are being considered for inclusion in the list of the services which will attract the Swachh Bharat cess.
Indirect tax revenue collections for 2014-15 stood at Rs 5,46,479 crore as against the revised estimates of Rs 5,42,325 crore. During the April-February period service tax collections stood at Rs 1,34,201 crore, up 8.1 per cent year-on-year.
The proceeds of the Swachh Bharat cess would be first credited to the Consolidated Fund of India and the government would be able to utilise it after due appropriation is made by Parliament by law. A new chapter VI has been inserted in the Finance Bill as per clause 117 to enable the cess which would be in addition to any cess or service tax leviable on such taxable services. To promote cleanliness, the government has also provided for 100 per cent deduction for contributions to the Swachh Bharat Kosh.