Cess 2% for rental services in GST

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binu sukumaran (Querist)
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08 May 2024 Sir.
My friend got rental payment after deducted of cess 2%.Can he get back this amount. If any need to chance in invoice format.
Please advise.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 If your friend received rental payment with a deduction of cess (2%), and if this deduction was not supposed to be applied according to the terms of the agreement or applicable laws, here’s what can be considered:

1. **Verify the Legal Basis**: First, your friend should verify whether the deduction of cess (2%) is legally applicable. Cess deductions can vary based on local laws, agreements, or specific provisions in contracts.

2. **Review the Agreement**: Check the rental agreement or contract between your friend and the tenant to understand if there are clauses related to cess deductions. If the agreement does not mention such deductions or if there’s a misunderstanding, it could be grounds to seek correction.

3. **Invoice Format Consideration**: If the deduction was made based on how the invoice was structured (e.g., if the invoice did not clearly specify that the cess should not be deducted), your friend may consider revising the invoice format for future transactions. Ensure that the invoice clearly states any exemptions or conditions regarding deductions like cess.

4. **Seek Correction or Refund**: If it’s determined that the cess deduction was incorrect or not applicable, your friend should approach the tenant or the payer to request a refund of the deducted amount. This can typically be done by providing clarification on the legalities or terms of the rental agreement.

5. **Legal Recourse**: If the tenant or payer refuses to refund the deducted amount and your friend believes it was unjustified, legal recourse may be necessary. This could involve sending a legal notice or seeking mediation to resolve the issue.

In summary, your friend should start by clarifying the legal basis for the cess deduction and then take appropriate steps to request a refund if it was deducted erroneously. Ensuring clarity in future invoices can also help prevent such issues from arising again.