06/11/2015 9:16 PM IST | Updated 15/07/2016 8:25 AM IST

Modi Government To Impose 0.5% Swachh Bharat Cess On Services From 15 November

Hindustan Times via Getty Images
NEW DELHI, INDIA - OCTOBER 11: Artist Manya Malhotra and Kathak Dancer Uma Sharma participate in the Swachh Bharat Abhiyan at East of Kailash on October 11, 2014 in New Delhi, India. Swachh Bharat Abhiyan (Campaign Clean India) is a national level campaign by the Government of India covering 4041 statutory towns to clean the streets, roads and infrastructure of the country. This campaign was officially launched on 2 October 2014 at Rajghat, New Delhi, where Prime Minister Narendra Modi himself wielded broom and cleaned a road. The campaign is India's biggest ever cleanliness drive and 3 million government employees and schools and colleges students of India participated in this event. (Photo by Saumya Khandelwal/Hindustan Times via Getty Images)

NEW DELHI--All services, including air travel, telephone calls, eating out and banking will become expensive from 15 November as the government on Friday decided to impose a 0.5 per cent cess on all taxable services to fund the Swachh Bharat programme.

The additional cess would be over and above the 14 per cent Service Tax rate which is already being levied and may yield the government an additional about Rs 400 crore during the remainder of the current fiscal.

"The government has decided to impose, with effect from November 15, 2015, a Swachh Bharat Cess at the rate of 0.5 per cent on all services, which are presently liable to service tax," a finance ministry statement said.

Finance minister Arun Jaitley had in Budget 2015-16 proposed to levy a Swachh Bharat cess of up to 2 per cent "on all or certain services, if need arises".

The decision to impose 0.5 per cent cess will translate into a tax of 50 paise only on every Rs 100 worth of taxable services.

"Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives," the statement added.

Swachh Bharat is among the major initiatives of the Modi government, which has embarked on a major drive to ensure cleanliness across the country.

In his Budget speech on February 28, Jaitley had said: "This cess will be effective from a date to be notified. Resources generated from this cess will be utilized for financing and promoting initiatives towards Swachh Bharat".

The government had in Budget 2015-16 estimated to collect over Rs 2.09 lakh crore from service tax. The Rs 400 crore collection from the cess would be over and above that.

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