Corporate Updates – 17-07-2015


Ministry of Finance has clarified that the Service Charges collected by restaurants / hotels / eateries are not ‘service tax’ imposed by the government and the proceeds of the ‘service charges’ are retained by the restaurants / hotels/eateries. Some of the consumers have a misapprehension that these ‘service charges’ are being collected by the restaurant on behalf of the government as tax. It is further clarified that effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air–conditioning or central air-heating in any part of the establishment is 5.6% (14% of 40%) of the total amount charged.


Foreign Investment in India by Foreign Portfolio Investors is required to be within the limit for investment in corporate bonds shall be required to be made in corporate bonds with a minimum residual maturity of three years. The Reserve Bank has clarified that the restriction on investments with less than three years residual maturity shall not be applicable to investment by FPIs in security receipts (SRs) issued by ARCs. However, investment in SRs shall be within the overall limit prescribed for corporate debt from time to time. The aforesaid directions come into force with immediate effect. Further operational guidelines, if any, will be issued by SEBI. All other existing conditions for investment by FPIs in the debt market remain unchanged.

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