Question

Which of the following statements about Krishi Kalyan Cess (KKC) is/are correct?
1. KKC is calculated in the same way as Service Tax is calculated.
2. The current rate of KKC is 0⋅50%.
3. KKC is similar to the KKS (Krishi Kalyan Surcharge).
Select the correct answer using the code given below:

A)1, 2 and 3
B)1 and 2 only
C)2 and 3 only
D)1 only

Answer 1

Hint: Krishi cess came into being in the 2016 budget. It became effective from June, 2016. The cess is a certain kind of tax which is imposed by the government for a specific purpose. Likewise, KKC was introduced for the welfare of the agricultural sector.

Complete answer:
Krishi means farming and Kalyan means welfare. Krishi Kalyan Cess is the tax levied by the government to raise funds for the promotion of agricultural activities. It is the cess which is imposed by the central government at the rate of 0.5% for improvement in agriculture and welfare of farmers. (Option 2 is correct)

KKC was considered as Goods and Service Tax and is calculated the same way as service tax is calculated. 0.5% is calculated as 50 paisa on every one hundred rupees worth of taxable services. (option 1 is correct)

To reduce the black money and to provide a stable and predictable tax regime Krishi Kalyan Surcharge was levied at 7.5% of the undisclosed income. This is used for agricultural and rural economies. (option 3 is correct)

Hence, the correct answer is option (A)

Note: KKC was first introduced by Finance minister Mr Arun Jaitley. It is applicable at 0.5% on taxable services at the budget 2016. This cess is charged, levied, collected and paid to the government independent of the service tax. The cess is charged separately on invoice and has to be paid under separate accounting codes.