FAQs on SWACHH BHARAT CESS (SBC)

FAQs on SWACHH BHARAT CESS (SBC)

Q.1     What is Swachh Bharat Cess (SBC)?

Ans.   It is a Cess which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2015,called Swachh Bharat Cess, as service tax on  all the taxable services at the rate of 0.5% of the value of taxable service.

Q.2      What is the date of implementation of SBC?

Ans. The Central Government has appointed 15th day of November, 2015 as the date from which provisions of Swachh Bharat Cess will come into effect (notification No.21/2015-Service Tax, dated 6th November, 2015 refers).

Q.3     Whether SBC would be leviable on exempted services and services in the negative list?

Ans. Swachh Bharat Cess is not leviable on services which are fully exempt from service tax or those covered under the negative list of services.

Q.4     Why has SBC been imposed?

Ans. SBC has been imposed for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

Q. 5    Where will the money collected under SBC go?

Ans. Proceeds of the SBC will be credited to the Consolidated Fund of India, and the Central

Government may, after due appropriation made by Parliament, utilise such sums of money of the

SBC for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

Q.6     How will the SBC  be calculated?

Ans. SBC would be calculated in the same way as Service tax is calculated. Therefore, SBC

would be levied on the same taxable value as service tax.

Q. 7    Whether SBC would be required to be mentioned separately in invoice?

Ans.  SBC would be levied, charged, collected and paid to Government independent of service tax. This needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code which would be notified shortly. SBC may be charged separately after service tax as a different line item in invoice. It can be accounted and treated similarly to Education cesses.

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Q. 8    Whether separate accounting code will be there for Swachh Bharat Cess?

Ans. Yes, for payment of Swachh Bharat Cess, a separate accounting code would be notified shortly in consultation with the Principal Chief Controller of Accounts. These are as follows:-

Swachh Bharat Cess (Minor Head)	Tax Collection	Other Receipts	Penalties	Deduct Refunds
0044-00-506	00441493	00441494	00441496	00441495

Q. 9    What would be effective rate of service tax and SBC post introduction of SBC?

Ans. Effective rate of service tax plus SBC, post introduction of SBC, would be [14% + 0.5%].

Q.10    Whether SBC is a ‘Cess’  on tax’ and we need to calculate SBC @ 0.50% on the amount of service tax like we were earlier doing for calculating Education Cess and SHE Cess?

Ans.   No, SBC is not a cess on Service Tax. SBC shall be levied @ 0.5% on  the value of taxable services.

Q. 11   Whether SBC is levied on all or selected services?

Ans.    The Central Government was empowered to impose SBC either on all or some of the taxable services. Vide notification No 22/2015-ST dated 6-11-2015, Government has notified

that SBC shall be applicable on all taxable services except services which are either fully exempt from service tax under any notification issued under section 93(1) of the Finance Act, 1994 or are otherwise not leviable to service tax under section 66B of the Finance Act, 1994.

Q.12   How will the SBC be calculated for services under reverse charge mechanism?

Ans. In case of reverse charge under section 68(2) of the Finance Act, 1994, the liability has been shifted from service provider to the service recipient. As per section 119 (5) of the Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made thereunder are applicable to SBC also. Thus, the reverse charge under section 68(2) of the Finance Act,

1994, is made applicable to SBC. In this context, to clarify, Government has issued notification No. 24/2015-Service Tax  dated 12th   November,  2015  to  provide that  reverse  charge  under notification No.30/2012-Service Tax dated 20th June, 2012 shall be applicable for the purpose of levy of Swachh Bharat Cess mutatis mutandis.

Q.13   How will SBC be calculated for services where abatement is allowed?

Ans. Taxable services, on which service tax is leviable on a certain percentage of value of taxable service, will attract SBC on the same percentage of value as provided in the notification No. 26/2012-Service Tax, dated 20th June, 2012. So, this notification would apply for SBC also in the same manner as it applies for service tax.

For example, in the case of GTA, [Service Tax + SBC]% would be (14% Service Tax + 0.5% SBC) X 30% = 4.35% (4.20%+0.15%)

Q.14   Whether Cenvat Credit of the SBC is available?

Ans. SBC is  not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.

Q.15   What would be the point of taxation for Swachh Bharat Cess?

Ans. As regards Point of Taxation, since this levy has come for the first time, all services (except those services which are in the Negative List or are wholly exempt from service tax) are being subjected to SBC for the first time. SBC, therefore, is a new levy, which was not in existence earlier. Hence, rule 5 of the Point of Taxation Rules would be applicable in this case.  Therefore, in cases where payment has been received and invoice is raised before the service becomes taxable, i.e. prior to 15th  November, 2015, there is no lability of Swachh Bharat Cess. In cases

where payment has been received before the service became taxable and invoice is raised within

14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable  on  services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th  Nov,

2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015.

Q.16    How would the tax (Service Tax and SBC) be calculated on services covered under

Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006.?

Ans. The tax (Service Tax and SBC) on services covered by Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006, would be computed by multiplying the value determined in accordance with these respective rules with [14% + 0.5%]. Therefore, effective rate of Service Tax plus SBC in case of original works and other than original works under the works contract service would be 5.8% [(14% + 0.5%)*40%] and 10.15% [(14% + 0.5%)*70%] respectively. Similar, would be the tax treatment for restaurant and outdoor catering services.

Q.17    How would the tax be calculated on restaurant services covered under Service Tax

(Determination of Value) Rules, 2006.?

Ans. Swachh Bharat Cess would be calculated on the value arrived at in accordance with the Service Tax (Determination of Value) Rules, 2006. For example, the effective Swachh Bharat Cess in respect of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, having the facility of air–conditioning or central air-heating in any part of the establishment, would be 0.5% of 40% of the total amount, i.e, 0.2% of the total amount. The cumulative service tax and Swachh Bharat Cess liability would be [14% ST + 0.5% SBC] of

40% of the total amount, i.e., 5.8% of the total amount charged.

Q.18    Whether SBC would be applicable on services covered by Rule 6 of Service Tax Rules (i.e. air travel agent, life insurance premium, purchase and sale of foreign currency and services by lottery distributors/selling agents)

Ans.    Sub-rule (7D) to rule 6 has been inserted vide notification 25/2015-Service Tax, dated

12th November, 2015 so as to provide that the person liable for paying the service tax under sub-

rule (7), (7A), (7B) or (7C) of rule 6 of Service Tax Rules, shall have the option to pay SBC as determined as per the following formula:-

Service Tax liability [calculated as per sub-rule (7), (7A), (7B) or (7C)] X 0.5%/14%

The option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances.

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Q. 19   How would liability be determined in case of reverse charge services where services have been received prior to 15.11.2015 but consideration paid post 15.11.2015?

Ans.    In respect of reverse charge mechanism, SBC liability is determined in accordance with Rule 7 of Point of Taxation Rules, as per which, point of taxation is the date on which consideration is paid to the service provider. Thus, SBC liability in such case will be 0.5% X Value of taxable service.

Q.20    Does a person providing both exempted and taxable service and reversing credit @

7% of value of exempted service under Rule 6 of Cenvat Credit Rules, does he need to reverse the SBC also?

Ans.    As SBC is not integrated in the Cenvat Credit chain and reversal under Rule 6 is payment of amount equal to 7% of the value of exempted services, hence, reversal of SBC is not required under Rule 6 of Cenvat Credit Rules, 2004.

FAQs on SWACHH BHARAT CESS (SBC)

Ordinary Business transacted at an Annual General Meeting

Ordinary Business transacted at an Annual General Meeting

Ordinary Business transacted at an Annual General Meeting

Section 102(2) of  the Companies Act,  2013 talks about  the businesses i.e.  the matters/items/agendas, which constitute the Ordinary Businesses to be discussed, considered and approved by the members i.e. the shareholders of a company in the Annual General meeting of that Company.

These businesses  are to be compulsorily dealt  in every Annual  General  Meeting of  a Company,  and therefore these are called as ‘Ordinary Business’.

The Ordinary Businesses as prescribed in the Section 102(2) of the Companies Act, 1956 are as follows:

(i)            the consideration of financial statements and the reports of the Board of Directors and auditors;

(ii)           the declaration of any dividend;

(iii)          the appointment of directors in place of those retiring;

(iv)           the appointment of, and the fixing of the remuneration of, the auditors;

Any businesses except the above 4(four) businesses shall be deemed to be ‘Special Businesses’.

Notes:

·         . The corresponding provisions  for Section 102(2) of  the Companies  Act,  2013  were earlier prescribed under Section 173(1) of Companies Act 1956.

·        . The provisions of this section is applicable to all companies (both Private and Public Company including Listed company).

 

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FAQs of Professional Ethics relating to CA Profession

FAQs of Professional Ethics relating to CA Profession

 

FAQs of Professional Ethics relating to CA Profession

Q. Whether a chartered accountant in practice can use expression like ‘Income Tax Consultant’, ‘Cost Accountant’, ‘Company Secretary’, ‘Cost Consultant’ or a ‘Management Consultant’?

A. No, direction given by the Council under Clause (7) of Part I of the First Schedule to the CA Act prescribes that it is improper for a chartered accountant to state on his professional documents that he is an Income-tax Consultant, Cost Accountant, Company Secretary, Cost Consultant or a Management Consultant.

Q. Can a chartered accountant in practice also practice as an advocate?

A. Yes, direction given by the Council under Clause (7) of Part I of the First Schedule to the CA Act prescribes that a chartered accountant in practice who is otherwise eligible may practice as advocate, subject to the permission of the Bar Council. But in such cases , they should not use designation 'chartered accountant' in respect of the matters involving the practice as an advocate. In respect of other matters they should use the designation 'chartered accountant' but they should not use the designation 'chartered accountant' and 'advocate' simultaneously.

Q. Whether a chartered accountant in practice can use the designation 'Corporate Lawyer'?

A. No, a chartered accountant in practice is not permitted to use the designation 'Corporate Lawyer'.

Q. Can a chartered accountant in practice/firm give advertisement in press?

A. Yes, the members in practice may advertise through a write-up setting out the services provided by him or his firm and particulars of his firm subject to Advertisement Guidelines issued by the Council( published in December, 2009 issue of the journal). Direction given by the Council under Clause (7) of Part I of the First Schedule to the CA Act provides that a chartered accountant in practice/firm cannot give advertisement in press. However, a special exemption has been made as regards publication of the name and address of a member or that of his firm, with the description chartered accountant(s), in an advertisement appearing in the press in the circumstances as listed below , provided that the advertisement is not displayed more prominently than is usual for such advertisements or the name of the member or that of his firm with the designation chartered accountant(s) appears in type not bolder than the substance of the advertisement: Advertisement for recruiting staff in the members own office. Advertisement inserted on behalf of clients requiring staff or wishing to acquire or dispose of business or property. Advertisement for the sale of a business or property by a member acting in a professional capacity as trustee, liquidator or receiver. When advertising for staff, it is desirable that members should avoid the expression such as “a well-known firm”, since this would savour of advertisement. Similar considerations apply to advertisements for articled assistants. The advertisements should not contain any promotional element nor should there be any suggestion that the services offered by the chartered accountants or his firm are superior to those offered by other accountants.

Q. Whether a member can appear on television/radio or give lectures at forums?

A. Yes, direction given by the Council under Clause (7) of Part I of the First Schedule to the CA Act prescribes that a member may appear on television/radio or give lectures at forums and may give his name and describe himself as chartered accountant. Special qualifications or specialized knowledge directly relevant to the subject matter of the programme may also be given. But no reference should be made, in the case of practicing member, to the name and address or services of his firm. What he may say or write must not be promotional of him or his firm but must be an objective professional view of the topic under consideration. Recommended Read: FAQs on One Person Company

Q. Whether companies in which chartered accountants have been appointed as directors on their Board can publish description about the chartered accountant's expertise, specialization and knowledge in any particular field or add appellations or adjectives to their names in the prospectus or public announcements issued by these companies?

A. The Council's attention has been drawn to the fact that more and more companies are appointing chartered accountants as directors on their Boards. The prospectus or public announcements issued by these companies often publish descriptions about the chartered accountants' expertise, specialization and knowledge in any particular field or add appellations or adjectives to their names. Attention of the members in this context is invited to the provisions of Clause (6) and (7) of Part I of the First Schedule to the CA Act. In order that the inclusion of the name of a member of the Institute in the prospectus or public announcements or other public communications issued by the companies in which the member is a director does not contravene the above noted provisions, it is necessary that the members should take necessary steps to ensure that such prospectus or public announcements or public communications do not advertise his professional attainments and also that such prospectus or public announcements or public communications do not directly or indirectly amount to solicitation of clients for professional work by the member. While it may be difficult to lay down a rigid rule in this respect, the members must use their good judgement, depending upon the facts and circumstances of each case to ensure that the above noted provisions are complied with both in letter and spirit. It is advisable for a member that as soon as he is appointed as a director on the Board of a company, he should specifically invite the attention of the management of the company to the aforesaid provisions and should request that before any such prospectus or public announcements or public communication mentioning the name of the member concerned, is issued, the material pertaining to the member concerned should, as far as practicable be got approved by him. FAQs of Professional Ethics relating to CA Profession Also Read: Features of GST