Advocate Santosh Kumar

ADJUSTMENT OF EXCESS PAID SERVICE TAX IN CASE OF NON-DEDUCTION OF PROPERTY TAX FROM VALUE OF SERVICE TAX PAYABLE ON RENTAL INCOME UNDER NEGATIVE LIST

NEW PROVISION OF EXEMPTION W. E. F. 1st July, 2012

For those  assesses who are liable to pay service tax on their income from renting on immovable property, the Central Government vide Notification No. 29/2012-ST, dated 20th June, 2012 and w.e.f. 1st day of July, 2012 has exempted  the taxable service of renting of an immovable property, from so much of the service tax leviable thereon under section 66B of the said Finance Act, as is in excess of the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies:

            Provided that any amount such as interest, penalty paid to the local authority by the service provider on account of delayed payment of property tax or any other reasons shall not be treated as property tax for the purposes of deduction from the gross amount charged:

            Provided further that wherever the period for which property tax paid is different from the period for which service tax is paid or payable, property tax proportionate to the period for which service tax is paid or payable shall be calculated and the amount so calculated shall be excluded from the gross amount charged for renting of the immovable property for the said period, for the purposes of levy of service tax.

 Example:

Property tax paid for April to September = Rs. 12,000/-

Rent received for April  = Rs. 1, 00,000/-

Service tax payable for April     = Rs. 98,000/- (1, 00,000 -12,000/6) * applicable rate of   service tax.

ADJUSTMENT OF EXCESS PAID SERVICE TAX

Sub-rule( 4C) of rule 6 of the Service Tax Rule, 1994 has been substituted w. e. f.  1st July, 2012 and as per this sub-rule where a person liable to pay service tax in respect of service of renting of immovable property has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, on account of non-availment of deduction of property tax paid in terms of notification No. 29/2012-Service Tax , dated the 20th June, 2012, from the gross amount charged for renting of the immovable property for the said period at the time of payment of service tax, the assessee may adjust such excess amount paid by him against his service tax liability within one year from the date of payment of such property tax and the details of such adjustment shall be intimated to the Superintendent of Central Excise having jurisdiction over the service provider within a period of fifteen days from the date of such adjustment.

In my earlier article titled “Pay Service Tax with interest on Renting of Immovable Property by 27.11.2012 to avoid penalty” I have informed the readers that 27th November, 2012 is Last Date of Payment of Arrear (Due) of Service Tax on Renting of Immovable Property without Penalty, present article may be helpful for them.

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Author – Santosh Kumar (Advocate)

WZ-64A, Mukherjee Park , Tilak Nagar,

New Delhi- 110018.

9958391853

inditaxsolution@yahoo.co.in

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3 responses to “Adjustment of Excess Service Tax paid In Case Of Non-Deduction of Property Tax from Rental Income”

  1. gk badrinath says:

    excess amount paid towards the service tax and same has refunded by settlement commissioner &
    they levied amount towards penalty charges.
    Department having objection towards adjustment excess towards penalty charges.
    please clarify.

  2. acpsharma says:

    if assessee has collected service tax on gross rent i.e. without deducting property tax, can also deduct prop tax from rental income before payment to service tax dept. is that correct or assessee should pay the service tax on gross rent which he has collected from tenant.

  3. v.n.babu says:

    Can i pay service tax arrears by cheque dt 27-11-212 0n the 27th or is it necessary that the cheque has to be realised by the 27th ?

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