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Suvidha Digest
A One Stop Consultancy House

July 2014
          Issue XII

Indirect Tax:
Restaurant Service- Double Taxation
Taxability of Information Technology Software and Related Services
Direct Tax:
Major Changes in Income Tax Return
Subsidy :
Highlights of West Bengal Incentive Scheme 2013 for MSMEs in Textile Sector

Our Gamut of Services:

•  Indirect Tax
•  Direct Tax
•  Financial Consultancy (Central/ State Governments Subsidy & Incentives
•  Project Consultancy & Loan Syndication
•  Empanelled Valuer ( with various banks/ FI’s)
•  Placement
•  Insurance
•  Mutual Funds
•  Advisory
•  Broking
•  Depository
•  Valuation Real Estate Consultants

•  Restaurant Service – Double Taxation

Taxation of services provided by restaurants has always been a litigative issue. Since the introduction of Negative List, the services provided by a restaurant having air conditioning facility, irrespective of license to serve alcoholic beverages, have been specified to be taxable. Since restaurants work in dual capacity i.e. supply food and services in relation to such food, the applicability of tax under such situation becomes a debatable topic.

Moreover, for the determination of the Service portion in the activity carried on by such restaurants, Rule 2C of Service Tax (Determination of Value) Rules, 2006 specifies that 40% of the total amount will be considered as the value of service portion for calculation of Service Tax. Where, “Total amount” means the sum total of the gross amount and the fair market value of all goods and services supplied. The supply of food which is considered as ‘Deemed Sale’ also attracts VAT on 100% of the Bill amount. Therefore, customer is paying VAT and Service Tax on the same 60% of the bill amount. This gave rise to the number of cases, two of which are discussed below which throw light on the dispute related to double taxation and also provide a concrete conclusion without any solution.

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•  Taxability of Information Technology Software and Related Services

Information Technology has become an indispensible part of our lives. Softwares play an integral role in the supporting the day to day activities of a business. Be it maintaining books of accounts, issuing invoices, tracking delivery or even receiving payment, each and every aspect of business is now largely dependent on the use and applications of softwares. In this regard, a question often arises whether such softwares shall be leviable to Service Tax or VAT.

In this regard, it is important to note that provisions relating to Service tax clearly define the activities relating to information technology software which would be liable to Service Tax.

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•   Major Changes in Income Tax Return

Income Tax returns (ITR) are used by assessees to declare the details of income earned by them in the Financial Year. Every year various ITRs are notified by the department. This year ITRs have been notified with major changes and with the help of this article our objective is to make the readers aware of the recent changes made which are as follows :-

1. All taxpayers filing E-Returns will have to compulsorily update correct mobile number and E-Mail-IDs, otherwise there will be login issues before uploading of return on income tax department’s website i.e.

2. Now onwards Income Tax Refund will be issued directly in the bank account of the taxpayer through ECS only and no more refund cheques will be issued in the name of assessee. Therefore, utmost care should be taken while mentioning Bank Account Number and IFSC Code in the income tax returns.

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•  West Bengal Incentive Scheme for MSMEs in Textile Sector

Commencement and Duration

The West Bengal Incentive Scheme for MSMEs in Textile Sector shall come into effect on and from the 1 September 2013 in the whole of West Bengal and remain valid for the period ending on 31st March, 2018.

It shall generally be applicable to all MSMEs in the Textile Sector which have started production on or after 1st day of September, 2013 as a manufacturing enterprise.

more >

Indirect Tax: Direct Tax: Project Consultancy & Loan Syndication Empanelled valuer, Subsidy/Incentives Recruitment Solutions
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R.B Mandal
Sourav Gupta
9830016263 / 9836599200
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Dindayal Jajodia (Subsidy) - 9830550018
Mr. Sandeep Agarwal
9339144910 / 033 22150852/53
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