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Monthly Archives: November 2013


Today, there is Service tax implication on almost every sector, and real estate is no exception. With the introduction of the negative list concept since July, 2012, the scope of applicability of Service tax has increased manifold A summarized analysis is contained herein providing guidance on the implication of Service tax on various forms of real estate transactions.

Income of Trusts

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In India there are many religious/charitable trusts for e.g. temples, Ashram, Gurudwaras, hospitals, educational, etc. propagating and working for social and charitable activities. What about their financial and taxing matters?

These trusts have to follow many regulations. Mainly they have to follow the rules of Bombay Public Trust Act (For Maharashtra State), Indian Societies Act, Companies Act (old sec 25 and new section 8) and Income Tax Act. Further if the trust receives donation from foreign then registration under Foreign Contribution Regulation Act is required.  

We looked at the conditions governing tax exemption on leave travel allowance (LTA). In this post we will look at the calculation of the tax exemption amount. The exemption is available only on travel expenses (ticket fare etc.) incurred by the employee on leave travel. Expenses on local conveyance, boarding, lodging, sightseeing etc. cannot be considered.

 Many people mistakenly believe that whatever is spent on leave travel towards ticket fare, taxi fare etc. can be considered in full for tax exemption. There are several conditions — as laid down by Section 10(5) of the Income Tax Act and Rule 2B of the Income Tax Rules — which govern calculation of the actual tax exemption. Let us see how one can calculate the tax exemption if an employee submits details of the travel expenses to the employer.

The first notification relating to export can be traced back to Notification No.2/99 dated 28-02-1999 which means that since July 1, 1994 up to 28-02-1999 the concept of ‘export of service’ was absent and consequently earnings in foreign exchange suffered service tax in contrast to the exporters of goods who enjoyed exemption. The said notification was simple and provided exemption to specified services for which payments were made in convertible foreign exchange. This notification was rescinded and replaced by a new notification no.6/99 dated 09-04-1999. The only change was the addition of a proviso. The proviso withdrew the exemption granted if the proceeds received in India in convertible foreign exchange was repatriated from or sent outside India. This notification survived till February 28, 2003. With effect from March 1, 2003 vide Notification No.2/2003 the Government exploded a nuclear device on the exporters of services by rescinding (withdrawing) the notification.

1 Real Estate & Service Tax

1.1  Definition of term Service – Section 65B(44)

 Section 65B (44) defines service as – “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include—

 (a) an activity which constitutes merely,––

 (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or

(ii) a transaction in money or actionable claim;

 (b) a provision of service by an employee to the employer in the course of or in relation to his employment;

 (c) fees taken in any Court or tribunal established under any law for the time being in force.

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