Pradeep Jain - Chartered Accountant

No tax on gratuity of up to Rs 10 lakh

Subject news:

HC rejects TTK Group’s plea on service tax levy
The Madras High Court has dismissed a petition by TTK Group seeking prohibition on levying of service tax on the royalty resulting from the transfer of right to use its logo by the company’s subsidiaries. The court, while observing that the writ petition was not maintainable, ruled that the issue raised by the petitioner being one related to classification, there was a clear bar of jurisdiction imposed under the statute.TTK & Co which has presence across several segments of industry including consumer durables, pharmaceuticals & supplements and bio-medical devices had registered its logo ‘ttk’ as an ‘artistic work’ under the Copy Rights Act, 1957.It had permitted its group companies, including TTK Prestige and TTK LIG, to use the same logo. The company entered into agreements with its group companies, which have been permitted to use the artistic work in their packages, cartons and containers, receiving royalty in respect of the same. Post introduction of the service tax under the Finance Act, 1994, the commissioner of service tax, Chennai, while checking the books, had directed that TTK was liable to pay service tax on the transaction of transfer of right to use copyright. TTK is said to have explained to the commissioner that there was no liability to pay service tax on the transfer of use of copyright. Notwithstanding this, the commissioner issued show cause notice to the company demanding service tax to the tune of R1.82 crore, on the royalty received for the period between 2004 and 2007.As against the notice, the company preferred an appeal before the Custom Excise & Service Tax Appellate Tribunal (CESTAT) and in the meantime also moved a writ petition at Madras High Court, obtaining an interim order. Thereafter, the company withdrew the appeal filed before the CESTAT. Justice TS Sivagnanam said that the issue as to whether service tax was liable to be paid on the nature of transaction done by the petitioner with its group companies, whether the logo which was registered under the Copy Right Act was used as an artistic work or merely with the purpose to show that the products marketed by their group companies also belong to the TTK group, were all issues which involve adjudication of disputed questions of fact. These issues cannot be permitted to be raised for being adjudicated in a writ petition, he said.

{Source: http://www.businessfortnight.com}

Corporate news:
FM Jaitley against burdening salaried, middle class
Finance Minister Arun Jaitley today said that he does not favour burdening the salaried and middle-class with more taxes but would go after the evaders in widening the net. In fact, he would encourage more money being put in the pockets of tax payers that will lead to spending and collection of more indirect taxes. "This widening of the tax base. What does it mean? ...I pay the same indirect tax as my attendant. Our volume of consumption may be different. So everybody is paying indirect taxes. "And literally almost half your taxes are indirect taxes today. He pays excise, he pays customs duty, he pays service tax. Now as far as income tax is concerned, to bring those who evade tax is widening the tax net, I am all for it," the Minister said in an interaction with PTI journalists at PTI headquarters. He was replying to a question on whether his budget would look at widening the tax base to maximise revenue. Jaitley, who will be presenting his first full fledged Budget in February, said that in his last budget he had increased the tax exemption limit from Rs 2 lakh to Rs 2.5 lakh and would even raise it further if he had more money.
{Source: http://www.moneycontrol.com}

Corporate news:

No tax on gratuity of up to Rs 10 lakh
If gratuity is received in earlier years then exemption at time of retirement will reduce to that extent, subject to the overall limit. Sudhakar Rao, an employee with a large private sector firm is due to retire in two months and is planning his post-retirement life. His finances are in order. He has no liabilities since his home loan has been paid off. His children were earning and would repay the education loans taken for their higher studies. Rao is expecting to receive a sizeable amount at the time of retirement by way of gratuity, employee provident fund and unused leave. He wants to know what are the taxes that he will be liable to pay, so that he can plan how to invest the rest of amount accordingly. Generally, benefits received at the time of retirement are taxable under the Indian Income tax law as profits in lieu of salary in terms of section 17(3) of the Income Tax Act('Act'). However, one can avail various tax benefits on the amounts received on retirement from the employer, subject to provisions contained in the Act.
{Source: http://www.business-standard.com}

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No tax on gratuity of up to Rs 10 lakh

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