The government has imposed two new levies,a 0.5 per cent Swachh Bharat Cess on all services, now liable to service tax, and a 2 per cent regional connectivity cess on international air travel and flights between metros and big cities.The Swachh Bharat cess will be effective from November 15. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives.The decision will increase the service tax outgo on insurance premiums, air fares and cell phone bills.
The decision to impose 0.5 per cent cess will translate into a tax of 50 paise only on every Rs 100 worth of taxable services.Swachh Bharat is among the major initiatives of the Modi government, which has embarked on a major drive to ensure cleanliness across the country.
The cess for the creation of the regional connectivity fund (RCF) corpus will be levied from January 1 to enable the regional connectivity scheme to start from April 1, Aviation Secretary R.N. Choubey told reporters. The scheme provides for viability gap funding (VGF) from the government for operating small aircraft to small towns with a fare cap of Rs. 2,500 per hour of flying.
