The Indian government's Ministry of Finance has announced a Swachh Bharat Cess at the rate of 0.5% on all services presently liable for service tax, with effect from 15 November, 2015. It implies that the service tax is set to increase from 14% to 14.50% on all services at your India centers.

To ensure that this change reflects in your invoices, you need to add a Swacch Bharat Cess component to the tax groups you apply for your services.  

Note: Swacch Bharat Cess is accounted and needs to be paid separately under a separate accounting head, so it needs to be charged and shown separately in the invoice.

TO ADD SWACHH BHARAT CESS TO TAX GROUPS

  1. Navigate to Admin > click Setup > Tax Groups > click the name of the tax group.
    The Edit Tax Type window opens.
  2. Click the Component tab.
  3. Click the Component Name list and select any tax component.
    The fields on the screen are filled with the values related to the selected component.
    Replace them with the following values for Swacch Bharat Cess :  
    -  Tax:
    Enter the value as 0.5.      
       Shows the value of the tax applicable for the selected tax component.      
       Delete the number and type the tax percentage for Swacch Bharat Cess, which        is 0.5.    
    -  Apply Tax On:
    Select Base Price or Discounted Price.      
       This field allows you to select whether you want to apply the tax on the base          price or the discounted price of the service. Select the same option that you          have selected for the service tax component.
    -  Calculation Method: Select the Simple radio button.  
    -
     % of Price of Tax: This field shows the percentage of the base price of the               service to be taxed.      
       Set it to 100 as the Swacch Bharat Cess applies to the complete base price of         the service.
  4. Click Add.
  5. The component is added below the existing tax components in the group.
  6. To rename the component, click the name of the component, and then type Swacch Bharat Cess . 

If you use any other tax groups for some other centers, repeat the steps above to add the Swacch Bharat Cess to those tax groups. 

TO APPLY THE TAX CHANGES TO EXISTING APPOINTMENTS

After you add the Swacch Bharat Cess component to the relevant tax groups in Zenoti, the system shows the following alert for all the open invoices related to services (including for partial payments). Click the here link on the alert to apply the updated tax to the base prices of the services in the invoice. Note that even for partial payments, clicking the link results in applying the taxes to the whole base prices of the services, and not just on the remaining dues. 

TO CHANGE THE PRICES OF SERVICES THAT ARE INCLUSIVE OF TAXES

If the prices of any of your services are inclusive of taxes, the increase in the service tax reduces your net revenues from the services, until you update the prices to reflect the enhanced tax.

Modify the sale price of services that are inclusive of taxes as follows:

  1. Navigate to Admin > Resources > Services > select a service.The Edit Service window opens.
  2. Click the Price tab.
  3. For each service that has the Tax Included checkbox selected, type the new price you want to apply in the Sale Price box.

    Important:
    The new price is calculated as Existing sale price + (Base price of the service * 0.5/100). However, you can apply or round off the price to a value that is more suitable.
    For example, if the base price of a service is ₹ 5000, the Swacch Bharat Cess on it would be 0.5% of ₹ 5000, which is ₹ 25. Previously, if the sale price of the service is fixed at ₹ 5500 including the taxes, to retain the same net revenues on the service, you now need to add ₹ 25 to the sale price towards Swacch Bharat Cess. The sale price then becomes ₹ 5525.

See Also

FAQs on Cess Components to Service Tax

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