Service tax calculation rent immovable property

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Querist : Anonymous

Querist : Anonymous (Querist)

18 June 2013 If an individual receives rent from his immovable property as Rs 5,40,000 per annum and Rs 32,16,000 per annum totalling to Rs 37,56,000 per annum:-

1. Does he have to pay Service Tax separately or together for both the Rents received ??
2. Can you please let us know how much Service tax needs to be paid for the entire year (or every quarter) along with the calculation ?
3. Can we deduct Property Tax as a deduction while calculating Service Tax? if yes, the amount of property tax would be of the previous year or the present year?

Regards

CA Priti Surana

CA Priti Surana (Expert)
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19 June 2013 Rent From immovable property is an income liable to service tax in the hands of property owner, ie. the service provider.

Now, If the rent income exceeds rs 10 lacks in a year, you are liable to charge service tax and pay it to govt.

Note that in the preceding year your rent income was not less then 10 lacks, otherwise u will get exemption of rs 10 lacks this year.

Entire rent income i.e. 3756000 is liable to service tax and you will charge from each of the service receivers.

No property tax is not deductible while calculating service tax.

CA Priti Surana

CA Priti Surana (Expert)
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19 June 2013 Further No service tax is there on renting of residential dwelling...means, no sr tax on renting of residential premises.

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Querist : Anonymous

Querist : Anonymous (Querist)

19 June 2013 1. can u pls provide calculation of service tax computation for rent received of 37 lakhs... Pls keep in mind last yr rent received was less than 10lakhs

2. if property tax wont be deducted, what happed to this notification which said property tax will be deducted (https://www.servicetax.gov.in/notifications/notfns-2012/st29-2012.htm)

regards

CA Priti Surana

CA Priti Surana (Expert)
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19 June 2013 Yes, it is obviously very clear from the notification, that property tax is deductible.

you will have to pay tax on 2756000/- @12.36%
it comes to Rs. 340642.

and regarding period conflict, it is clearly mentioned in the notification, "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."

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