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 voluntary retirement compensation of ₹ 7,00,000 after 30 years 4 months of service. He still has 6 years of service left. At the time of voluntary retirement, he was drawing basic salary ₹ 20,000 p.m.; Dearness allowance (which forms part of pay) ₹ 5000 p.m. Compute his taxable VRS.
10 August, 2015
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Voluntary retirement compensation tax treatment: exemption limited by statutory ceiling formulas; excess is treated as taxable salary. Computation of taxability of voluntary retirement compensation is governed by a statutory exemption limited by prescribed ceiling formulas and the ... Summary
Voluntary retirement compensation tax treatment: exemption limited by statutory ceiling formulas; excess is treated as taxable salary.
Computation of taxability of voluntary retirement compensation is governed by a statutory exemption limited by prescribed ceiling formulas and the principle that the exempt amount is the lesser of specified sums. In the example, compensation received of 700,000 gives an exempt amount of 500,000 under the statutory ceiling, leaving 200,000 as taxable salary under the governing exemption provision and associated rules.
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