sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
Service Tax »
 How to save tax on capital gains arising from selling a house
 Tax savers start hunting for best ELSS ahead of tax-saving season
 NotificationNo.1/2018-ServiceTax
 All you need to know Taxation of dividend income
 How different forms of gold are taxed
 Should you use home sale value to get tax break
 Auction of Government of India Dated Securities November 12, 2018
 Auction for Sale (Re-issue) of Government Stock (GS) November 12, 2018
 How can I save tax on gains made on selling a shop a
 Here's is a quick guide to how you can save tax on gifts
 Don't buy life insurance just for saving tax, ask these 4 questions before investing

Food from McDonalds, Dominos & Pizza Hut to get cheaper as FinMin may cut service tax on takeaway, home-delivery
June, 20th 2013

The finance ministry may soon clarify that takeaway and home delivery of food will not attract service tax, a move that will be welcomed by the likes of McDonalds, Dominoes and Pizza Hut.

"The ministry is examining the issue. There is a strong view that takeaways and home deliveries should not attract service tax," a senior government official told ET.

Finance minister P Chidambaram is also understood to have favoured this reading of the service tax rules.

The finance ministry's clarification, if it finally materialises, will bring the much-needed relief to the industry that has made several representations to the government seeking clarity on the issue and even pitching for deferment of the new levy.

The confusion stems from the union budget 2013-14 that had extended service tax to all air-conditioned restaurants from April 1 this fiscal.

As a result air-conditioned restaurants began charging service tax from their customers even if food was delivered at home or packed and carried away.

This is because the Central Board of Excise or Customs, the apex body in charge of administering indirect taxes, did not clearly spell out the applicability of service tax to takeaways and home deliveries.

The confusion has resulted in some service providers imposing tax while others have collected the tax but not deposited it.

Earlier, service tax was levied only on air-conditioned eateries that served alcohol.

No Constitutional Provisions For Such Tax

The finance ministry has now concluded that the tax could not be levied on these services after examining the structure of the tax and constitutional provisions. It has relied on the interpretation of Article 366 of the Constitution, following the 46th amendment, that empowered state governments to levy sales tax on supply of food during the course of a service.

Experts also say court judgements clearly spell out that supply of goods would attract states sales tax.

"Prior to the amendment also it was held by courts that in case of takeaways, the dominant intention is supply of goods and services, if any, are only incidental. Hence, it was held that these transactions are liable to sales tax/ VAT," said Prateek Jain, partner, KPMG.

Smita Jatia, Managing Director, Hardcastle Restaurants, which runs McDonald's in the West, said the service tax has not had much of an impact on business. The government's recent imposition has not impacted the demand in our business and we continue to see a steady growth. Value has been the cornerstone of McDonald's, globally. ''

Service tax is leviable at 12%. Restaurant service enjoys 60% abatement, implying that tax applies only on 40% of the total billed amount.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Services SEO LLC e-boost Search Engine Optimization Services Internet Marketing Services Website Placement Services On-site Webs

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions