Luxury tax excluded from "room charges" under Expenditure-tax Act, 1987 after revised CBDT stance and tribunal decision.
The Central Board of Direct Taxes has revised its stance on the inclusion of luxury tax in "room charges" under the Expenditure-tax Act, 1987. Previously, Circulars No. 645 and 650 indicated that luxury taxes levied by state governments should be included in room charges for tax applicability. However, following a contrary decision by the Income-tax Appellate Tribunal, the Board now agrees that luxury tax should not be included in room charges. Consequently, the earlier circulars are withdrawn effective immediately.
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