Cess upto 2 per cent will be levied on select services depending on the funds needed
This was explained to a group of tax experts by finance ministry officials during a post-budget meeting. The group was told that the cess may be 0.5 per cent or 1 per cent or even 2 per cent depending upon the requirement.
"However, the cess will be imposed on select services," said a source without elaborating.
Amit Maheshwari, Partner, Ashok Maheshwary and Associates said: "We are happy that it will not imposed on all services and would be a need-based cess. This will not have a significant bearing on the price situation".
In his Budget speech, Finance Minister Arun Jaitley had proposed an enabling provision to levy cess at a rate of 2 per cent or less on all or certain services if the need arises. This cess will be effective from the date to be notified.
Resources generated from this cess will be utilised for financing and promoting initiatives towards Swachh Bharat.
Prime Minister Narendra Modi had on August 15, 2014 given a call to achieve the objective of clean India by the year 2019, the 150th year of the birth anniversary of Mahatma Gandhi, through the Swachh Bharat Mission.
The Budget had also proposed 100 per cent deduction for the contributions, other than by way of CSR spending, to the Swachh Bharat Kosh.
On Wednesday, the Cabinet approved enabling provisions for Swachh Bharat Kosh to enable people living in India and abroad and companies to give funds for the clean Indian mission.
Using the donations, the fund will finance activities such as construction of new toilets as well as repair and renovation of dysfunctional toilets in rural areas, urban areas, elementary, secondary and senior secondary government schools and aanganwaadis.