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Suvidha Digest
A One Stop Consultancy House

NOVEMBER 2014
          Issue XV

TABLE OF CONTENTS
Indirect Tax:
Levy of service tax on activities involved in relation to inward remittances from abroad to beneficiaries in India through MTSOs

Service Tax on Joint Venture Transaction
Direct Tax:
WRITE UP ON SECTION 194 IA

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•  Levy of service tax on activities involved in relation to inward remittances from abroad to beneficiaries in India through MTSOs

With Circular 180/06/2014-ST dated 14th October 2014, the earlier Circular 163/14/2012-ST dated 10th July 2012 stands superseded. The present Circular clarifies the situations when service tax will be leviable on the activities involved in the inward remittances from abroad to the beneficiaries in India through MTSOs (Money Transfer Service Operators). Earlier it was clarified that there is no service tax per se on the foreign exchange remitted to India from outside for the reason that money does not constitute a service and that conversion charges or fee levied for sending such money would also not be liable to service tax as the person sending money and the company conducting the remittance are both located outside India. It was also clarified that the Indian bank or financial institution that provides service to the foreign bank or any other entity is not liable to service tax as the place of provision of service shall be the location of the recipient of service.

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•   Service Tax on Joint Venture Transaction

Certain doubts have been raised regarding the levy of service tax on taxable services provided (i) by the members of the Joint Venture (JV) to the JV and vice versa; and (ii) inter se between the members of the JV. In addition, doubts have also been raised regarding taxation of cash calls or capital contribution made by the members to the JV and also administrative services provided by a member to the JV.

Many Doubts has been raised by assesses regarding service tax on JV and its members, then in response to such doubts the TRU of CBEC has come up with a Circular no 179/5/2014-ST dated 24th September,2014 clarifying the issue of the levy of Service tax on taxable services provided-

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•   TDS under Section 194 IA of Income Tax Act, 1961

To understand the concept and issues related to section 194 IA, we first need to know what the section quotes. The section relates to deduction of tax at source on payment of certain immovable property other than agricultural land.

“194 IA. (1) Any person, being a transferee, responsible for paying (other than person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.

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Indirect Tax: Direct Tax: Project Consultancy & Loan Syndication Empanelled valuer, Subsidy/Incentives Financial Solutions Recruitment Solutions
Shilpi Bajoria
shilpi@suvidhaconsultants.com
9830931239
R.B Mandal
directtax@suvidhaconsultants.com
Sourav Gupta
9830016263 / 9836599200
Sunil Bhoruka (Projects) - sunil@suvidhaconsultants.com - 9830158714
Dindayal Jajodia (Subsidy) dindayal@suvidhaconsultants.com - 9830550018
Vikash Kumar Kedia
vikash@suvridhi.com
9830040804
Mr. Sandeep Agarwal
9339144910 / 033 22150852/53

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