Effect of service tax on IHP

This query is : Resolved

Sachin Jain (Querist)
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24 July 2007 is the service tax paid on rent is deductable expenses for the purpose of computation of income under the head income from house property

Sanjeev Kumar Varshney

Sanjeev Kumar Varshney (Expert)
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24 July 2007 Service Tax paid by you on Rent is Cenvatable, hence no expenses. However if you are not proving any taxable service or manufacturing any excisable goods so that you can adjust Cenvat of ST, then it is a part of rent and deductible alomgwith rent.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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25 July 2007 The question pretains to service provider, ie. the land lord and not the tenant. The solution given by Mr. Sanjiv is for service receiver.

If the service tax is collected from the tenant, then it is not an expense and hence question of deduction does not arise.

There is no specific provision in this regard. As such, It may not be deductible.

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CA Mani

CA Mani (Expert)
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25 July 2007 Under IHP, No other expenditure other than Repairs & Collection Charges(30% of NAV) and Interest will be allowed. So, There is no question of talking abt other exp's. Service tax will not be alloowed.

And for your information, Service tax paid will be collected from tenant and paid to dept. in general.

So, In no case service tax will be allowed in computation of IHP.