Krishi Kalyan Cess comes into effect, services gets costlier from today

With the new Krishi Kalyan Cess (KKC) of 0.5 per cent on taxable services coming into force from today services like eating out, mobile phone usage and air and rail travel will become expensive. With imposition of Krishi Kalyan Cess the total incidence of Service Tax will go up to 15 per cent.

KCC is aimed at financing and promoting initiatives to improve agriculture.  The Central Board of Excise and Customs (CBEC) has notified that the Cess will come into force from June 1.

The service tax is levied on all services, expect a small negative list. It will add extra burden on the pockets of service recipient. The levy has already been raised from 12.36 per cent to 15 per cent within a span of one year. Last year also, the government had imposed Swachh Bharat Cess of 0.5 per cent on Service Tax.

Though Krishi Kalyan Cess will be a cost to the manufacturers availing services on which KKC is being paid by the service provider. Now it remains to be seen what effect will it have on the common man's pockets.