Service tax on rent

Provisions:

If the value of services(i.e. rent in this case), doesnt exceed Rs. 10,00,000 during the preceeding financial year, then no service tax is applicable in the current year till value of services upto Rs. 10,00,000 of the current year.

And the service tax is chargeable @ 12.36%.

Further, TDS is chargeable @ 10% --in case of rent of land/building, furniture & fixture

                                                    @ 2%- in case of Plant / machinery

In case of rent, TDS is deducted on amount exclusive of service tax.

Journal entry(assuming service tax is chargeable in this case based on above provisions):

Further, it is assumed that it was the rent of Building and it was exclusive of service tax:

Rent A/c Dr.                                                    1,30,000

Service tax expense A/c( @ 12.36%) Dr.       16,068

                       To Party A/c                                                    1,33,068 

                       To TDS Payable                                               13,000

Thank u so much sir.......:)

Agree with sumit. However, the exemption of Rs. 10 Lacs is for aggregate value of all the taxable service from all the premisis and not for each taxable service. 

For JV, it's always better to route TDS through Party Ledger A/c:

Rent A/c Dr.                                                    1,30,000

Service tax expense A/c( @ 12.36%) Dr.           16,068                      

             To Party A/c  Cr.                                                  1,46,068                        

Party A/c Dr.                                                                          13,000

      To TDS Payable  Cr.                                                          13,000 

Agreed with Mr. Manoj

Sumit & Manoj

I wish to know why you are treating the service tax as an expense. Will it not be debited to Input Service Tax (Receivable) as cenvat credit is available on this assuming this is used to provide taxable output services.

Request your valued thoughts.

Regards,

In this question, it hasn't been mentioned whether the assessee is service provider or not....it might be possible that hez carryin on business trading in goods or any other business not involving output service.

In case the assessee is carrying on business of providing of output service, then it shall be debited to CENVAT Receivable A/c.

but in rply above, it has been assumed that there is no output service.

Dipjyoti,

Since Sumit has already replied, I need not repeat. Infact, you yourself have assumed stating "assuming this is used to provide taxable output services." while we assumed otherwise. I also agree to your view.

Actually few of my clients who are paying Rent are Shopkeepers & Retailers and are not service providers. I had there situation in mind while replying to the above...

if cash paid towards salary of 20000 is it disallowable under 40a(3)?? 

Salary Payment exceeding Rs. 20,000 in Cash to a single employee on a single day is disallowed u/s 40(A)(3)

from the above, the Landlord is 'forced' to benefit by 3,068 every month.