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Suvidha Digest
A One Stop Consultancy House

March 2014
          Issue VII

Indirect Tax:
Arrest and bail provisions under service tax
Highlights of west bengal budget 2014-15
Highlights of interim union budget 2014-15
Direct Tax :
Taxation aspects-received of interest subsidy, insurance subsidy and excise duty refund
Subsidy :
Revised Restructured Technology Up gradation Fund Scheme

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Since the introduction of the arrest and bail provisions in the Finance Act 1994( hereinafter after referred to as the &Act " ) in the last Budget 2013, almost an year ago, there have been a number of instances where many service tax evaders have been arrested which has caused a huge fury and extensive debates and discussion.

Almost 27 persons have been arrested for alleged evasion of service tax all over the country as on January 2014. In a majority of the cases it has been alleged that service tax has been collected but has not been deposited to the government. Amongst the arrested are owner of courier agency, MD of mining company, building consultant from the South and owner of various construction companies.

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Finance Minister of West Bengal, Shri Amit Mitra presented the annual budget for the financial year 2014-15 on 17th February 2014. The Budget aimed at giving relief to salaried individuals as well as small business and traders. The major tax amendments are stated below:


1. Simplification of VAT registration procedure by proposing automatic registration of dealer upon filing of online registration and submission of minimum sale invoice of ` 50000 has been waived off.

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The Hon’ble Finance Minister P. Chidambaram presented the Interim Budget for the fiscal year 2014-15 on Monday, February 17, 2014 to cover expenditure until the Government's term ends in May, 2014. While presenting the Interim Budget 2014 in Parliament, the Hon’ble Minister proposed no major changes in tax laws. However, the Hon’ble Minister announced some changes in Indirect Tax Rates.

The amendments are stated below:

Exemption on handling, storage or warehousing of rice: The definition of ‘agricultural produce' in section 65B(5) of the Finance Act, 1994, leads to a differential treatment between paddy and rice. Paddy is covered by the definition of agricultural produce which loses its essential characteristic after milling into rice. Notification 25/2012 dated June 20, 2012 ( " the Mega Exemption Notification " ) has been amended to insert an entry at Sl. No. 40 which reads as " services by way of loading, unloading, packing, storage or warehousing of rice " to exempt levy of service tax on handling, storage and warehousing of rice.

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It is a well known fact that to promote industrialization in specific sectors or in specific parts of the country the Government of India comes out with various promotional schemes for the industries. Incentives are mainly accompanied by various schemes of subsidy framed by the ministry from time to time. However, the subsidies are generally associated with few attached conditions which should be complied by the organization for availing those incentives.

On receipt of such subsidy, the major issue which comes into play is the taxation of such receipts. The Apex court vides in the case of Ponni Sugars (infra) and Sahney Steel (infra) had clearly stipulated the conditions for classification of the subsidy based on the terms and conditions attached with it.

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•  Revised Restructured Technology Up gradation Fund Scheme (RR-TUFS)(With effect from 01.04.2013 to 31.03.2017)

1. The Salient Features of scheme:

1.1 Commencement / Duration of the scheme:

R-TUFS form was extended for the first year of the 12th Plan, i.e. up to 31.03.2013. The Government further continues the Technology up Gradation Fund Scheme for the textile & jute industries in Revised Restructured form with effect from 01.04.2013 to 31.03.2017 by passing a scheme known as " Revised Restructured Technology up Gradation Fund Scheme (RR-TUFS). "

1.2 Effective date: The effective date for the Scheme starts (from 01.04.2012 to 31.03.2017).

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