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SERVICE TAX DEDUCTION FROM HOUSE PROPERTY INCOME

This query is : Resolved 

05 July 2011 WHETHER SERVICE TAX PAID BY LESSOR TO BE DEDUCTED FROM THE GROSS RENTAL TO ARRIVE AT ANNUAL VALUE OF THE HOUSE PROPERTY? THE GROSS RENTAL IS DEEM TO INCLUDE SERVICE TAX.AS PER L/l AGREEMENT THE LESSOR IS TO BEAR ALL THE TAXES IN RESPECT OF HOUSE PROPERTY.WHETHER ANY CASE LAW OR CIRCULAR IS AVAILABLE TO CLARIFY THE SAME?

05 July 2011 Service tax paid by the tenant doesn’t partake the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore it has been decided that tax deduction at source (TDS) under sections 194-I of Income-tax Act would be required to be made on the amount of rent paid/payable without including the service tax.


It is not required to include the service tax portion while calculating Gross rent


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