Krishi Kalyan Cess (KKC)

This would be levied @ 0.5% and would be levied over and the above the Service Tax and the Swachh Bharat Cess. The Krishi Kalyan Cess has been levied for the purpose of financing and promoting initiatives to improve agriculture and would be applicable from 1st June 2016.

Vide Notification No. 27/2016-ST dated 26.05.2016, it has been notified that w.e.f. 1.6.2016, wherever reverse charge mechanism is applicable in terms of Notification No. 30/2012-ST dated 20.06.2012, the same (reverse charge) shall be applicable mutatis mutandis for the purpose of Krishi Kalyan Cess. 

Abatements and KKC

Vide Notification No. 28/2016-ST dated 26.05.2016, it has been notified in respect of KKC w.e.f. 1.6.2016 that –

• Where a taxable service is exempt under any notification / special order or Service Tax is otherwise not payable, such service shall be exempt from levy of whole of KKC
• KKC shall be leviable only on that portion / percentage of taxable service which is subject to Service Tax after availing abatement under Notification No. 26/2012-ST dated 20.06.2012.
• Value of taxable services for the purpose of KKC shall be determined as per Service Tax (Determination of value) Rules, 2016.

Changes in the Finance Bill 2016 as passed by the Lok Sabha

A snippet of all changes made in the Finance Bill, 2016 as passed by the Lok Sabha viz-a-viz the Finance Bill, 2016 presented originally in the Lok Sabha are presented hereunder:

1. Unlisted shares held for 24 months or less would be treated as short-term capital asset
As per section 2(42A) of the Income-tax Act, any capital asset held by the taxpayer for a period of not more than 36 months
immediately preceding the date of its transfer is treated as short term capital asset.
The aforesaid period of 36 months is treated as 12 months in case of shares held in a company. However, an amendment was made by Finance Act (No. 2) Act, 2014 to provide that the said period of 12 months won't be applicable in respect of shares not listed in recognized stock exchange. Hence, with effect from 01.04.2015, unlisted share is treated as short-term capital asset if it is held for not
more than 36 months immediately preceding the date of its transfer. The Finance Bill, 2016 as passed by the Lok Sabha inserted a new clause to provide that the period of 36 months would be substituted
with period of 24 months in case of unlisted shares. In other words, unlisted shares of company would be treated as short-term capital asset if it is held for a period of 24 months or less immediately
preceding the date of its transfer.

2. When employer's annual contribution is deemed as income received by employee