Airfares, phone bills, restaurant bills costly from today

From June 1, your restaurant and telephone bills or airline tickets will become costly  with imposition of Krishi Kalyan Cess (KKC) of 0.5% on all taxable services.

The KKC will apply to all taxable services and central value added tax credit will be available to service providers on the cess paid on input services, said a government official.

Finance Minister Arun Jaitley in his Budget speech announced the government plan to impose KKC of 0.5% on all taxable services effective from June 1 this year to fund farm initiatives.  Money raised through KKC will be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers, Jaitley said.

Aiming to give relief to farming sector, the government also cut in excise duty on irrigation



pumps and soil nutrients besides slashing import duty on cold storage related equipments. 

Service providers will get credit on the cess paid on input services.

With KKC, all taxable services will now be effectively charged a service tax of 15%.However the Finance Ministry clarified that the KKC will not be levied on services in the negative list and 47 exempted services. For bills that are generated and paid before June 1, the KKC will not apply. 

Bills before June 1For bills generated before June 1, but paid from June 1, the cess will be included. The KKC will be in addition to the VAT and service charges that are paid by customers. The KKC is not leviable on the component of service tax but the value of service, as in the case of the Swachh Bharat Cess.