Binding effect of government circulars: administrative clarifications do not bind courts or quasi judicial authorities and cannot create estoppel. Government circulars and clarifications represent administrative understanding of statutory provisions and do not bind courts or quasi judicial authorities; they cannot create an estoppel against the statute and do not prevent recovery of tax lawfully leviable despite prior communications to taxpayers.
Service elements in works contracts taxable when classifiable under construction or erection services, not limited to a new label. Service elements within a composite works contract that correspond in nature to Commercial or Industrial Construction Service, Construction of Complex Service or Erection, Commissioning or Installation Service are taxable under those service heads; such service elements need not be classified exclusively under the subsequently inserted sub clause, and levy under the existing defined service categories is proper based on the substantive character of the activities.
Resident firm classification for advance ruling expands eligible applicants under service tax advance ruling framework. Notification declares resident firm as a class of persons eligible for advance rulings under section 96A of the Finance Act, 1994 for service tax. It defines "firm" to include partnerships under the Indian Partnership Act, limited liability partnerships (including those without a company partner), sole proprietorships, and One Person Companies, and links the term "resident" to the meaning in the Income-tax Act as applicable to a resident firm.
Example:-Mr. X received retrenchment compensation of ₹ 10,00,000 after 30 years 4 months of service. At the time of retrenchment, he was drawing basic salary ₹ 20,000 p.m.; dearness allowance ₹ 5,000 p.m. Compute his taxable retrenchment compensation.
10 August, 2015
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Retrenchment compensation exemption under Sec. 10(10B): apply least-of-three test for calculating taxable retrenchment; excess taxable. Computation of retrenchment compensation exemption under Sec. 10(10B): compute the three comparator sums using the employee's service length and salary ... Summary
Retrenchment compensation exemption under Sec. 10(10B): apply least-of-three test for calculating taxable retrenchment; excess taxable.
Computation of retrenchment compensation exemption under Sec. 10(10B): compute the three comparator sums using the employee's service length and salary components, take the least of those sums as exempt. In the example the exempt amount is Rs. 4,32,692 and the remaining Rs. 5,67,308 of the retrenchment payment is taxable.
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