St on rent received????????????
This query is : Resolved
22 December 2014
Hi
As per the Notification No. 29/2012 Service Tax. Service tax is calculated after subtracting Property Tax from Rent received. But the Property tax is also paid 1/2 yrly, that is after raising the ST bill.
eg. Property tax for oct 13 to March14 is paid in may 2014. How will i deduct the said tax in the period oct13 to March14 for which the ST bills have been already issued???
thnx in advance
As per the Notification No. 29/2012 Service Tax. Service tax is calculated after subtracting Property Tax from Rent received. But the Property tax is also paid 1/2 yrly, that is after raising the ST bill.
eg. Property tax for oct 13 to March14 is paid in may 2014. How will i deduct the said tax in the period oct13 to March14 for which the ST bills have been already issued???
thnx in advance
22 December 2014
You can claim the deduction on accrual basis.
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22 December 2014
As per notification 29/2012 dated 20th June, 2012, "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"
Therefore, you can claim exemption services tax on Renting of immovable property upto municipal taxes on accrual basis
Therefore, you can claim exemption services tax on Renting of immovable property upto municipal taxes on accrual basis
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23 December 2014
Thnx
but still it's clear to me, plz read my query & reply back
thnx
priya
but still it's clear to me, plz read my query & reply back
thnx
priya
25 July 2025
This is a great and practical question involving **Service Tax on Rent of Immovable Property** and the **abatement for property tax** under **Notification No. 29/2012-ST**, particularly when **property tax is paid after the service period ends**.
---
## ✅ Legal Position as of Dec 2014:
**Notification No. 29/2012-ST** allows deduction of **property tax actually paid** on the rented property **from the gross rent**, **before calculating Service Tax**.
But here’s the catch:
> 📌 **Deduction is allowed only when property tax is actually paid**, not merely accrued.
---
## 🧾 Your Situation:
* You're charging rent monthly or quarterly (e.g., Oct 2013 – March 2014)
* Property tax for this period was **paid in May 2014**
* ST invoices were **already raised earlier**, **without property tax deduction**
* Now you want to **adjust past ST liability**, based on **subsequent property tax payment**
---
## 🛠️ What Can Be Done?
As per CBEC Circular No. **166/1/2013-ST**, you are **allowed to claim refund or adjust ST** already paid if:
1. **Property tax is paid later**, but relates to the **past rent periods**, AND
2. You have **supporting documents** showing:
* Date and amount of property tax paid
* That it relates to that particular rental period
---
## 🔁 Two Options:
### **A. Adjust ST in Current/Next Period**
If the ST returns for Oct–March period are already filed:
* Adjust the eligible amount of property tax **as deduction in the next month/quarter**’s ST liability
* Keep proper records in case of audit
### **B. Claim Refund**
If adjustment is not feasible or you want to recover ST already paid:
* File a **refund application** under Section 11B of Central Excise Act (made applicable to ST)
* Time limit: **1 year** from **date of payment of property tax**, not from rent bill date
* Include:
* Rent invoices
* Proof of property tax paid
* Proof of ST paid earlier
* Declaration that you haven’t passed ST burden to tenant
---
## ✅ Summary:
| Question | Answer |
| -------------------------------------------------------- | ---------------------------------------------------- |
| Can I deduct property tax paid **after** billing period? | **Yes**, if it relates to that rent period |
| Can I **adjust** it in future ST returns? | Yes, in **next ST return** with proper documentation |
| Can I **claim refund** of ST already paid? | Yes, within **1 year of property tax payment date** |
| Key document needed? | Property tax challan + rent agreement + ST challans |
---
Let me know if you’d like a sample **refund application format** or **adjustment working in Excel** for ST purposes.
---
## ✅ Legal Position as of Dec 2014:
**Notification No. 29/2012-ST** allows deduction of **property tax actually paid** on the rented property **from the gross rent**, **before calculating Service Tax**.
But here’s the catch:
> 📌 **Deduction is allowed only when property tax is actually paid**, not merely accrued.
---
## 🧾 Your Situation:
* You're charging rent monthly or quarterly (e.g., Oct 2013 – March 2014)
* Property tax for this period was **paid in May 2014**
* ST invoices were **already raised earlier**, **without property tax deduction**
* Now you want to **adjust past ST liability**, based on **subsequent property tax payment**
---
## 🛠️ What Can Be Done?
As per CBEC Circular No. **166/1/2013-ST**, you are **allowed to claim refund or adjust ST** already paid if:
1. **Property tax is paid later**, but relates to the **past rent periods**, AND
2. You have **supporting documents** showing:
* Date and amount of property tax paid
* That it relates to that particular rental period
---
## 🔁 Two Options:
### **A. Adjust ST in Current/Next Period**
If the ST returns for Oct–March period are already filed:
* Adjust the eligible amount of property tax **as deduction in the next month/quarter**’s ST liability
* Keep proper records in case of audit
### **B. Claim Refund**
If adjustment is not feasible or you want to recover ST already paid:
* File a **refund application** under Section 11B of Central Excise Act (made applicable to ST)
* Time limit: **1 year** from **date of payment of property tax**, not from rent bill date
* Include:
* Rent invoices
* Proof of property tax paid
* Proof of ST paid earlier
* Declaration that you haven’t passed ST burden to tenant
---
## ✅ Summary:
| Question | Answer |
| -------------------------------------------------------- | ---------------------------------------------------- |
| Can I deduct property tax paid **after** billing period? | **Yes**, if it relates to that rent period |
| Can I **adjust** it in future ST returns? | Yes, in **next ST return** with proper documentation |
| Can I **claim refund** of ST already paid? | Yes, within **1 year of property tax payment date** |
| Key document needed? | Property tax challan + rent agreement + ST challans |
---
Let me know if you’d like a sample **refund application format** or **adjustment working in Excel** for ST purposes.
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