About Swachh Bharat Cess

Swachh Bharat Cess (SBC) is an additional 0.5% tax to all service businesses that are liable to pay Service Tax. It was announced by the Government of India under Chapter VI of the Finance Act 2015, and is effective from November 15, 2015 onwards.

Rules:

1. No Credit of Cenvat shall be available to assess.
2. SBC cannot be paid by using a credit from any other duty or tax.
3. Where abatement is allowed on service tax, such abatement shall be included in calculating Swachh Bharat Cess.
4. Even though the reverse charge mechanism continues to apply, input credit is not allowed.
5. Swachh Bharat Cess is calculated on Net amount and not on Tax amount.

The SBC of 0.5% is to be paid by all citizens who use any service that is taxable under service tax.

Manage SBC in QuickBooks

When you create an invoice or a bill, you can select the 14.5% option in the tax rate drop-down list (where 14% is the Service tax and 0.5% is the SBC).

On the Tax page, you will see a tax section called Swachh Bharat Cess. You can view the tax amounts withheld for SBC in this section, while the service tax amounts continue to show in the Service Tax section.

SBC amounts are tracked separately based on guidance and notifications from the government.

The following accounts are added to ‘Chart of Accounts’ to support SBC:

• Swachh Bharat Cess Control (liability account)
• Swachh Bharat Cess Expense (expense account)

Reverse charges are automatically adjusted for not taking input credit.