6 November 2015
Swachh Bharat Cess @ 0.5% — Applicable on All Services from 15 November 2015
The Government of India, in order to encourage cleanliness, introduced the Swachh Bharat Cess at 0.5%.
For such a vast and populous country, India has its fair share of cleanliness concerns. Persons entrusted with the job of keeping the country clean struggle constantly, and cleanliness has a huge impact on public health — dirty surroundings cause diseases like malaria, dengue, diarrhea, jaundice, and cholera, with associated high public health expenditure. According to Government of India estimates, expenditure on health adds up to roughly ₹6,700 crore annually (approximately ₹60 per capita). Increased allocation for the Swachh Bharat Abhiyan can prevent many of these diseases, with consequential benefit to everyone.
So telephone bills, insurance, and eating out all became subject to this cess from 15 November — 50 paise for every ₹100 — making such services a bit more expensive.
The relevant notification:
Government of India, Ministry of Finance (Department of Revenue), New Delhi, 6 November 2015 — Notification No. 22/2015-Service Tax.
In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994, read with sub-section (5) of section 119 of the Finance Act, 2015, the Central Government, being satisfied that it is necessary in the public interest to do so, hereby exempts all taxable services from payment of such amount of the Swachh Bharat Cess leviable under sub-section (2) of section 119 of the said Act which is in excess of the Swachh Bharat Cess calculated at the rate of 0.5 percent of the value of taxable services — provided that the Swachh Bharat Cess shall not be leviable on services exempt from service tax, or otherwise not leviable to service tax under section 66B of the Finance Act, 1994. This notification came into force from 15 November 2015.
Originally published November 2015. The Swachh Bharat Cess was discontinued when service tax was subsumed into GST from July 2017 — this post is kept here as a historical record of how service tax worked at the time.