Deduction of property tax

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CA ASHWIN CHOPRA (Querist)
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10 July 2014 If the property tax is paid in 2014-15 pertaining to years 2007 to 2013 then can the deduction be taken in 2014-15

CA Pradeep Sharma

CA Pradeep Sharma (Expert)
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10 July 2014 Deduction can be claim only for the period for which service tax pertain (i.e you can not claim deduction in such case)

According to NN 29/2012 dated 20.06.2012

exempts the taxable service of renting of an immovable property, from so much of the service tax leviable thereon under section 66B of the said Finance Act, 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 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.

Example:
Property tax paid for April to September = Rs. 12,000/-
Rent received for April = Rs. 1, 00,000/-
Service tax payable for April = Rs. 98,000/- (1, 00,000 -12,000/6) * applicable rate of service tax