KRISHI KALYAN CESS

Salient Features of Krishi Kalyan Cess

• Krishi Kalyan Cess, imposed by Finance Act 2016 by inserting new Chapter-VI
• Krishi Kalyan Cess, @ 0.5% on all taxable services,
• Krishi Kalyan Cess will come into force w.e.f 01.06.2016
• Input Tax credit of Krishi Kalyan Cess will be available for payment of this cess
• Krishi Kalyan Cess  in the form of surcharge levied at 7.5% of undisclosed income to be used for agriculture and rural economy.
• Purpose of Krishi Kalyan Cess is for financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.
• The provisions of Chapter V of the Finance Act, 1994 and the rules made there under, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Krishi Kalyan Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services.

Krishi Kalyan Cess on All Taxable Services 

As per  Budget Speech of Shri Arun Jaitley, Minister of Finance,  dated 29-2-2016 on Union Budget 2016-2017 

” 152. I propose to impose a Cess, called the Krishi Kalyan Cess, @ 0.5% on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016. Input Tax credit of this cess will be available for payment of this cess. “

Krishi Kalyan Cess on undisclosed income

As per  Budget Speech of Shri Arun Jaitley, Minister of Finance,  dated 29-2-2016 on Union Budget 2016-2017 

160. I propose a limited period Compliance Window for domestic taxpayers to declare undisclosed income or income represented in the form of any asset and clear up their past tax transgressions by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. There will be no scrutiny or enquiry regarding income declared in these declarations under the Income-tax Act or the Wealth-tax Act and the declarants will have immunity from prosecution. Immunity from Benami Transaction (Prohibition) Act, 1988 is also proposed subject to certain conditions. The surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy. We plan to open the window under this Income Disclosure Scheme from 1st June to 30th September, 2016 with an option to pay amount due within two months of declaration.

Krishi Kalyan Cess Purpose as Explained in Notes on Clauses of Finance Bill 2016

New Chapter-VI

Clause 158 of the Bill seeks to insert new Chapter-VI so as to levy a cess to be called the Krishi Kalyan Cess, as service tax on all or any of the taxable services for the purposes of the Union for financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.

Income Declaration Scheme

Clauses 178 to 196 of the Bill seeks to insert a new Chapter IX relating to Income Declaration Scheme, 2016. The said Scheme, inter alia, provides for declaration of undisclosed income by any person. The scheme shall be in operation from the 1st day of June, 2016 till a date to be notified by the Central Government in the Official Gazette. The proposed Chapter, inter alia, provides for levying a tax of thirty per cent on the undisclosed income declared in the scheme, a surcharge at the rate of twenty-five per cent. of such tax as Krishi Kalyan Cess; and penalty at the rate of twenty-five per cent. of tax; procedure and manner of filing the declaration under the said Scheme; undisclosed income declared under the said Scheme not be included in the total income or affect finality of completed assessments; income declared under the said Scheme shall not be refundable; exemption from wealth-tax in respect of assets specified in declaration; power to remove difficulty by the Central Government; and power of Central Board of Direct Taxes with the approval of the Central Government to make rules for the purposes of the said Scheme.

Section – 161, Finance Acts – 2016 introduced Chapter VI : Krishi Kalyan Cess