Eating, staying in 5-Star hotels to help Swachh Bharat Mission

Shishir Sinha New Delhi | Updated on January 24, 2018

Eating or staying in five-star hotels are set to become costlier, as the Finance Ministry is likely to start levying the ‘Swachh Bharat Cess’ on some services. The Centre expects to net ₹2,000 crore from this.

“We plan to levy cess initially on a few very high-end services,” a senior Finance Ministry official said, adding that the rates could be 0.5 or even 1 per cent. The exact date of imposition and list of services will be notified only after the Finance Bill becomes law.

Cess is also a type of tax, but the difference between these two is that the Centre is not required to share earnings from cess proceeds with the States, as in the case of taxes. The Budget has proposed an enabling provision of levying cleanliness cess of up to 2 per cent “on all or certain services if need arises.” This cess will be over and above the new service tax rate of 14 per cent.

Funds from CPSEs

The official also said that all the Central public sector enterprises (CPSEs) have been asked to donate as provided for corporate social responsibility (CSR) towards the Swachh Bharat Kosh (SBK). This is likely to provide around ₹4,000 crore. The new Companies Act prescribes companies to spend at least 2 per cent of their average net profit in the last three years on CSR activities. The Finance Ministry expects around ₹6,000 crore from the Budget provision of coal cess. The Budget proposed increasing the Clean Energy Cess on coal to ₹200/tonne from ₹100.

“Overall, we expect to provide around ₹14,000 crore for the Swachh Bharat Abhiyaan, which will be sufficient to take various initiatives for cleanliness,” the official said. All the funds will be routed through SBK. Funds will largely be used to construct new toilets and repair and renovate dysfunctional ones in rural and urban areas, elementary, secondary and senior secondary government schools and Anganwadis. The Centre plans to give tax exemptions on such contributions.

Published on March 11, 2015

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