New Delhi: The government on Monday announced a Krishi Kalyan Cess of 0.5 per cent on all taxable services effective from June 1 to fund farm initiatives.
It also proposed cut in excise duty on irrigation pumps and soil nutrients besides slashing import duty on cold storage related equipments.
"I propose to impose a cess, called the Krishi Kalyan Cess, at 0.5 per cent on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers," Finance Minister Arun Jaitley said while presenting the Budget for 2016-17.
He said the cess would come into force with effect from June 1, 2016. "Input tax credit of this cess will be available for payment of this cess," he added.
Jaitley also proposed to amend section 35AD of the Income-tax Act so as to reduce the deduction from 150 per cent to 100 per cent in the case of a cold chain facility, warehousing facility for storage of agricultural produce, production of fertiliser among others effective from April 1.
For expenditure on agricultural extensions project, he proposed to amend section 35CCC of the Income-tax Act to restrict the deduction to 100 per cent from financial year 2017-18 (Assessment Year 2018-19).
To encourage cold storage facilities in the farm sector, Jaitley exempted service tax on all facilities provided by the state-run National Centre for Cold Chain Development effective from April 1.
At present, the service tax rate is 14 per cent.
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