Knock Knock: Would The Krishi Kalyan Cess @ 0.5% Burden The Public?

Union Finance Minister Arun Jaitley had announced in this year’s Budget that the government would levy a Krishi Kalyan Cess of 0.5% to finance activities related to agriculture and build a fund for the welfare of the farmers, effective June 1. This cess will be levied in addition to the prevailing service tax rate of 14.5%.

In simple terms, eating out, mobile phone usage, air and rail travel will become expensive with the imposition of this new cess. The common man tells us how the new addition in his tax expense would affect his ‘pocket’.

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Here is the breakdown of your train fare if you are a passenger travelling in 1 st class AC in the Rajdhani Express between Delhi and Mumbai:

* Total train fare: Rs 4,690

* Service charge (taken at 10%):469

* Subtotal: 5,159

* Service tax to be levied on 40% of the bill amount: 14% of 1876= 262.64

* Swachh Bharat Cess (0.5% of 1876)=9.38

* Krishi Kalyan Cess (0.5% of 1876)=9.38

*Value Added Tax (12.5% of subtotal)=644.875

*Total amount payable:4690+469+262.64+9.38+9.38+644.875=6085.275

The total payable amount, Rs 6085.275 is Rs 1,395.275 more than the actual train fare. This new fare, calculated after the imposition of Krishi Kalyan Cess is Rs 9.38 more than the fare shelled out by the public. Though this might seem as a marginal increase, considering the list of services on which the Krishi Kalyan cess is applicable, this is sure to pinch the consumers.