Notification 24/2007 dated 22-05-2007 service tax -pd

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Ranjeeth Balasundaram

41 Points Joined April 2009

DEAR SIR,

I AM FACING DIFFICULTY IN INTERPRETATING THE NOTIFICATION 24/2007 DATED 22-05-2007- SERVICE TAX REPRODUCED BELOW

Notification No. 24/2007 – Service Tax

G.S.R. (E). In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of renting of immovable property, referred to in sub-clause (zzzz) of clause (105) of section 65 of the Finance Act, from so much of the service tax leviable thereon as is in excess of the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies:

Provided that any amount such as interest, penalty paid to the local authority by the service provider on account of delayed payment of property tax or any other reasons shall not be treated as property tax for the purposes of deduction from the gross amount charged:

Provided further that wherever the period for which property tax paid is different from the period for which service tax is paid, property tax proportionate to the period for which service tax is paid 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.

ITS STATES ABOUT LEVEY MY DOUBT IS,

WHETHER LESSOR NEEDS TO COLLECT LESS SERVICE TAX AFTER AVAILING EXEMPTION OR AFTER COLLECTION PROPERTY TAX CAN BE ADJUSTED

IF WE CONSIDERED THAT AFTER COLLECTION IT TERMED TO BE SERVICE TAX COLLCTION AND MAY ATTRACTS SEC 73A IN WHICH EXCESS COLLECTION PROVISION WILL ATTRATCTS.

IF LESSOR AVAILED BENEFITS AFTER COLLECTING ENTIRE SERVICE TAX COMPONENT FROM TENETS WHETHER SAME BEING REIMBURSEABLE TO TENENT OR TERMED TO BE REVENUE RECEIPT UNDER INCOME TAX ACT 1961,

OR SAME WILL BE TERMED TO BE CAPITAL RECEIPT IF THE ASSESSEE TERMED RENTALS AS BUSINESS INCOME OR INCOME FROM LET OUT PROPERTY.

CONTRADICTORY NOTIFICATION REGARDS RULE 6(4)(C) STATES IF PAID WITHOUT AVAILING BENEFIT SAME CAN BE CONSIDERED BEFORE EXPIRY OF ONE YEAR FROM PAYMENT OF MUNICIPAL TAX , IF WHOLE AMOUNT COLLECTED FROM LESSEE AND PAID AFTER SAME CAN BE ADJUSTABLE ?? ON THAT CIRSUMSATANCES SAME NEEDS TO REFUNDABLE TO TENENTS OR TO DEPARTMENTS OR BE TREATED AS INCOME UNDER INCOME TAX ACT 1961.????

PLEASE CLARIFY >>>

Replies (3)

Ajit kumar Dubey

Taxation Manager

637 Points Joined September 2008

This notification is rescinded w.e.f 01-07-2012. Kindly note that deduction on account of property tax is now covered under a different notification, wherein the amount of tax actually paid is only allowed as deduction and not the amount payable. You cannot adjust your liability with an amount which you has not yet been paid.

shaik althaf

TAX PAYER

25 Points Joined November 2009

Dear Ranjeet,

I'm also having almost the same clarifications regading notification no 24/2007 now notification no 29/2012.

Kindly refer topic clarification on notification no 29/2012.

Kindly inform me also after finding actual method for claiming exemptions

Thanks

Althaf

Ranjeeth Balasundaram

41 Points Joined April 2009

Dear Mr. Althaf

As per above notifiaction its clear that service tax needs to be levied after deducting municipal tax paid from gross sum, where if Service tax collected from tenent before deducting municipal tax that amount will be termed to be excess collection of service tax since in notification its state that levy will be exempted not credit so collection could have been collected less if collected without deducting municipal tax from tenent same needs to be payable to department as per sec 73A so it never be taxed in income tax act, its accrued liability payable to department if collected from tenent.

another notification 25/2007 its states that self adjustment means if municipal tax paid after payment of service tax to department same can be adjusted by collecting less service tax from tenents in subsequent months with in a year of payment of municipal tax and same needs to be intimated to officer within 15 days of adjustment.

so its clear that excess collection do not constitute income under income tax since it is payable to department.

and lastly if service tax component paid earlier now taught of availment of municipal tax kindly consider whether one year is available and subsequently service tax reduced from tenent.

thanks.