The Krishi Kalyan Cess is imposed by the Union government at a 0.5% rate on all services which are liable to service tax. This tax is aimed at enhancing the improvement of agriculture and the welfare of farmers.
What is Cess?
Cess is a form of tax that is charged over and above the base tax liability of a taxpayer. A cess is usually imposed in addition to other taxes when the state or the central government plans to raise funds for specific purposes.
When was Krishi Kalyan Cess introduced?
Krishi Kalyan Cess (KKC) came into effect on 1 June 2016.
Why is Krishi Kalyan Cess important?
The idea behind the KKC is to charge a cess on a sector that is doing well so that the money thus collected can be used to de-stress a sector that was in trouble. The money from this cess is towards relieving farm distress. The services sector in India is doing well and it now contributes about thrice that of agriculture towards the GDP. Further growth in the services sector is expected to push the money gathered as KKC up, and this can be used for the betterment of the agriculture sector.