Swachh Bharat Cess (SBC)
What is Swachh Bharat Cess?
The Government of India has decided to levy the Swachh Bharat Cess proposed in the Budget on all taxable services from November 15, 2015. The cess will be levied at the rate of 0.5%.
On what services will Swachh Bharat Cess be calculated/levied?
Swachh Bharat Cess will be calculated on all the services.
Will it be calculated on tax amount or net amount?
It will be calculated on Net Amount.
Will Service Tax be updated with in QuickBooks automatically?
The default tax rate for Service Tax including Swachh Bharat Cess has been updated in QuickBooks. This rate is created under new tax agency name Swachh Bharat Cess.
What changes will one have to do in QuickBooks in order to calculate Swachh Bharat Cess?
QuickBooks by default creates a new tax agency for Swachh Bharat Cess. This new tax agency has a default tax code of 14.5% created with name "14.5% ST". This tax code is created for both purchase and sales transaction. This tax code is actually a group tax which includes 14% Service Tax and .5% Swachh Bharat Cess.
Now while creating any sales or purchase transaction you just need to select 14.5% ST tax code on the applicable line item. The printed transaction will have Swachh Bharat Cess separately mentioned in the tax summary section.
The Swachh Bharat Cess collected on sales transaction gets posted in the newly created "Swachh Bharat Cess Payable" account, and Swachh Bharat Cess paid on purchase transaction gets posted in the "Swachh Bharat Cess Expense" account.
Whether SBC paid on input service would be eligible as credit?
There is no amendment in the Cenvat Credit Rules, 2004 regarding availment and utilisation of SBC. In absence of the same, credit would not be admissible.
This means we would not be able to take credit for Swachh Bharat Cess, and Swachh Bharat Cess paid on purchases transactions will be treated as expense.
How should I record payment for Swachh Bharat Cess collected on sales transaction?
Click the Record Payment button in the Swachh Bharat Cess tax agency, select payment date, applicable period, payment account, enter the amount & memo and click on Save button.
NOTE: The payment for Swachh Bharat Cess should be recorded only from Swachh Bharat Cess tax agency and not from Service Tax agency. While recording payment of Service Tax you should select 14.00% ST from the Tax Code drop down and enter only the amount towards Service Tax.
Can we see Swachh Bharat Cess amount on Service Tax report?
No, as this is handled as a new tax agency in QuickBooks, you should refer to Swachh Bharat Cess Summary and Detail reports available in the Swachh Bharat Cess tax agency.