My client a private limited company had given some properties on rent & the tenant denied to pay the service tax amount on rent of factory. It pertains to AY 08-09. We paid the said amount to ST dept (to the tune of 12 lakhs)
Now we dnt know what to do with the o/s amount in the balanxcesheet.
We have recd the rent amt only ST is stil shoa\wn as debt recoverable.
If the Tenant is not ready to pay the service tax then In given situation, the amount of Rent so realized from the tenant would be treated as gross amount inclusive of Service Tax. You will pay service by reverse calculation For Eg. If you have recieved Rs 10000/- then the service tax would be calculated as follows
= 10000*12.5/112.5= 1111/-.
You can claim the tax not recoverable as bad debts in your books.
And since the matter relates to FY 2007-08, the service tax was paid to the credit of central govt. on receipt basis. Means, as explained by Asif ji, you should have treated the actual rent received as inclusive of service tax and calculated tax on reverse basis.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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