Abatement of service tax on Property tax payment., Service Tax

[S.C. WADHWA]

Dear Experts,
We are issuing invoice on tenant for Rs. One lac per month with break up as under:-
Rent amount ₹ 89000/- Plus service tax @12.36% ₹ 11000/-. But we are depositing
service tax of ₹ 10780/- after getting abatement of house tax paid ₹ 2000/- per month,
And by the end of the year we booked misc income ₹ 2640/-. Diff of service tax claimed
and paid.
Now my query is whether this procedure is OK or not. Please give your expert opinion. So that Income tax return can be filed accordingly. REGARDS, WADHWA

Posts / Replies

[Manoj Agarwal]

Dear Sir,

You are collecting service tax of ₹ 11000 and depositing only ₹ 10780 which is incorrect. Any excess amount collected representing as service tax must be immediately deposited with the exchequer (Section 73A).

If the gross rent including service tax is ₹ 1 Lacs, the break up should be as follows:

Rent = 89,220/- Less: Property Tax paid ₹ 2000

Taxable Rent = 87,220 Service Tax thereon @ 12.36% (14% w.e.f. 01-06-2015) = 10780/-

Gross Rent = 89,220 + 10780 = 1,00,000/-

Regards,

Manoj Agarwal,

Service Tax Consultant

+91-9937041788