The imposition of the Swachchh Bharat cess from November 15 on taxable services, which also entail service tax, is likely to bring in Rs 3,700 crore in the government’s kitty by the end of the current financial year. In addition to this, according to estimates, the government is likely to pocket around Rs 10,000 crore through the cess in 2016-17.
With the service tax having gone up already during the current fiscal (2015-16) to 14 per cent from 12 per cent (it became applicable from June 1, 2015), the addition of 0.5 per cent of Swachchh Bharat cess in it will not only make services like eating out in a restaurant, online payments of insurance premiums and other such activities more expensive, but will bring in funds to finance the cleanliness drive.
The finance ministry had, earlier this month, clarified that the Swachchh Bharat cess will not apply on those services for which payments have been received prior to November 15 and invoices raised before November 29.
The funds collected through imposition of cess will be used for construction of toilets mainly in rural households across the country under the Swachchh Bharat Mission of the government.
Official sources said that the government’s keenness on ensuring faster implementation of the Swachchh Bharat Mission (which envisions construction of toilets in households across country, especially in rural areas and schools in villages) can be gauged from the fact that it took no time in accepting a significant suggestion of the Niti Aayog’s panel of imposition of cess on key transactions to help fund the mission.
In its report submitted to the Prime Minister’s Office last month, the Niti Aayog’s sub-group of chief ministers on the Swachchh Bharat Abhiyan had suggested imposition of cess to fund the programme, which is Prime Minister Narendra Modi’s pet initiative.
Though the sub-group had suggested that states should share funds given by the Centre to implement the programme on 75:25 ratio (Centre:state), it has now been modified to 60:40. The sharing pattern is 90:10 for hilly states.
The panel had further suggested that since the construction of toilets has to be done in mission mode, therefore, higher budgetary support may be provided by the Centre and states for the construction of toilets in the next three years to ensure that construction targets are achieved in a time-bound manner.
For states which have made a substantial progress in the construction of toilets, the budgetary allocation of funds for them under the SBA will be low, the panel had suggested in its report.
Also, the sub-group had recommended that the financial support extended by the finance ministry through the viability gap funding scheme for infrastructure projects through public-private partnership mode may also be availed.
