Swachh cess draws consumer ire

The cess to fund the government's cleanliness drive, Swachh Bharat, that came into effect yesterday has drawn the ire of citizens as it has been imposed on virtually eveything that the middle class consumer spends on including eating out, telephony and travel.

Most people polled by a newspaper were not optimistic about improved sanitation as a result of additional tax.

According to revenue secretary Hasmukh Adhia, the government expected to collect around Rs10,000 crore from Swachh Barat cess over the full year.

The remaining months of the fiscal until 31 March 2016 would see the cess yield around Rs3,800 crore to the kitty.

The Swachh Bharat cess would be levied only on the portion of taxable services. This meant that the service tax on restaurant bills would increas from 5.6 per cent to 5.8 per cent following the levy of 0.5 per cent Swachh Bharat cess.

The finance ministry had also clarified that the Swachh Bharat cess would not be applicable to those services for which payments had been received prior to 15 November and invoices raised before 29 November.

In Budget 2015-16, finance minister Arun Jaitley, had proposed a Swachh Bharat cess of up to 2 per cent "on all or certain services, if need arises".

"Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives," the finance ministry had said while notifying the Swachh Bharat cess.