Renting of Property Services

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CA. Jyoti Baid (Querist)
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26 March 2009 A house is given on rent and service tax is collected at the rate of 10%.

The landlord has paid property tax on the house and takes exemption on the same while making payment of service tax to the Government.

For Example:
Rent- 10000
Service tax collected -1030

Rent- 10000
(-) Property tax-1000
Service tax actually paid-927

My question is
1. Should the landlord reimburse the excess amount of service tax collected from tennant or
2.Should he make the payment of total service atx collected to the Govt

Regards,
Jyoti

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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26 March 2009
Property tax is charged by the state governments.

Service tax is charged by the central government.

You cannot net the rent and property tax and pay service tax on the balance.

property tax has to be shared and for that month there will be reduction of rent

On the agreed rent service tax has to be paid to the government.

CA. Jyoti Baid

CA. Jyoti Baid (Querist)
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26 March 2009 Thank you for the reply.

My query is if I have collected full amt of service tax from the tennant but paid to the govt. after deducting the property tax amount as per Notification No.24/2007-ST dated 22.05.07. What should we do now?

Reimburse the balance to the tennant.
or,
Payment to the Govt

Tushar Yerawar

Tushar Yerawar (Expert)
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26 March 2009 You can refund the same to tenant provided you have raise the invoice seperately for property tax and rent or shown property tax seperately on invoice. If you have raised an invoice for total amount as rent and charged the ST on total amount then you have to pay the remaining amount to govt. You also need to pay the interest if there is dealy in payment of service tax.

Also, make the necessary disclosure in you return as your invoice amount and corresponding ST amount will not match.

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