07 August 2014
An individual provides services of renting of premises to a company. The company pays rent at fixed rate. As per agreement, sum paid towards rent is inclusive of service tax i.e. service tax will be determined by individual and rent received will be deemed to be inclusive of service tax.
Query is how service tax will be computed
Amount of rent received divided by 112.36%*12.36%
or first, property tax will be deducted and from remaining amount of rent received, aforesaid formula will be applied.
In short query is whether property tax paid will be deducted for determining service tax.
07 August 2014
As per my view the clause mentioned in agreement is sum paid towards rent is inclusive of service tax ,this means the amount of rent received includes the amount of service tax.
So Gross amount charged for renting shall be=amount inclusive of service tax/112.36%8100.
Now as per Notification No. 29/2012 service tax shall be calculated on (Gross amount cahrged for renting -Property tax Paid )
Service tax @12.36% shall be calculated on the above drawn figure.
09 August 2014
as per noitification as below 29/2012 of service tax as below
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.
you have deduct the property tax according to the period from the rent after that you have to calculate the service tax
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