Input Tax Credit
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 March 2010
Hello !
I m working in Silver Jewellery Manufacturing Co. and our company hired (Rent) no. of showroom in Shoping Mall for sale.
and we also pay RENT(Service Tax Included) to Pantaloon,TRENT, and many of companies.
Secondly we have also own showroom in Malls and we also given for Rent and we raise Rent Bill to party & Service Tax Charge in Bill and Further Pay to service tax.
So MY QUERRY IS Can we sett off service tax pay against Service TAx PAyable ??
I m working in Silver Jewellery Manufacturing Co. and our company hired (Rent) no. of showroom in Shoping Mall for sale.
and we also pay RENT(Service Tax Included) to Pantaloon,TRENT, and many of companies.
Secondly we have also own showroom in Malls and we also given for Rent and we raise Rent Bill to party & Service Tax Charge in Bill and Further Pay to service tax.
So MY QUERRY IS Can we sett off service tax pay against Service TAx PAyable ??
26 March 2010
Yes you can execept this two case
1. ensure that above mentioned parties is not depositing service tax under 11(d) or confirm from their rent bills what they have mentioned while collecting service tax
2. You should have valid registration under renting of immovable property with service tax department.
other wise you can take set off. Regards
Pragnesh
1. ensure that above mentioned parties is not depositing service tax under 11(d) or confirm from their rent bills what they have mentioned while collecting service tax
2. You should have valid registration under renting of immovable property with service tax department.
other wise you can take set off. Regards
Pragnesh
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 March 2010
THnx for Earler Reply Pragnesh sir
yes we have valid S.TAx Reg. No. under Rent
And we also paid to Rent (Including Service Tax) Apr 09 to Mar 10 then can be set off with Payble service tax ??
I also confirm in this connection other C.A. then he say you can not sett off because your nature of income is Production Of Silver Jewellery and this is a Rent income so tis income not linkup wit your business so u can`t set off with service tax payable
yes we have valid S.TAx Reg. No. under Rent
And we also paid to Rent (Including Service Tax) Apr 09 to Mar 10 then can be set off with Payble service tax ??
I also confirm in this connection other C.A. then he say you can not sett off because your nature of income is Production Of Silver Jewellery and this is a Rent income so tis income not linkup wit your business so u can`t set off with service tax payable
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 March 2010
THnx for Earler Reply Pragnesh sir
yes we have valid S.TAx Reg. No. under Rent
And we also paid to Rent (Including Service Tax) Apr 09 to Mar 10 then can be set off with Payble service tax ??
I also confirm in this connection other C.A. then he say you can not sett off because your nature of income is Production Of Silver Jewellery and this is a Rent income so tis income not linkup wit your business so u can`t set off with service tax payable
yes we have valid S.TAx Reg. No. under Rent
And we also paid to Rent (Including Service Tax) Apr 09 to Mar 10 then can be set off with Payble service tax ??
I also confirm in this connection other C.A. then he say you can not sett off because your nature of income is Production Of Silver Jewellery and this is a Rent income so tis income not linkup wit your business so u can`t set off with service tax payable
01 August 2024
In the scenario you've described, you can set off service tax paid on rent against the service tax payable on rent received from your tenants, but there are specific conditions and rules that need to be followed. Here's a detailed explanation based on the Service Tax regime:
### **Service Tax Set-Off on Rent**
1. **Service Tax on Rent Payments:**
- If you are paying rent to third parties (like Pantaloon, TRENT, etc.) and the rent includes service tax, you can claim input credit on the service tax paid as long as the rented premises are used for providing taxable services or for business purposes related to the production or sale of goods.
2. **Service Tax on Rent Received:**
- When you lease out your own showroom and charge rent along with service tax to your tenants, you need to pay the service tax on the rent received to the government.
### **Conditions for Set-Off:**
- **Directly Linked to Business:**
- The service tax paid on rent for premises used in the course of your business can be set off against the service tax payable on rental income received. This is because the premises are used for conducting business operations, and the expenses are considered part of the business costs.
- **Input Tax Credit Rules:**
- Under the Service Tax rules, input tax credit (ITC) can be claimed for the service tax paid on inputs and input services used for providing taxable output services. Since your core business is the manufacture and sale of silver jewelry, if the rented premises (where you pay rent) are used in connection with this business, you are allowed to claim the ITC.
### **Key Points to Note:**
1. **Eligibility:**
- You must ensure that the rented premises are used in the business operations and not for exempt activities. For example, if the showroom is used for displaying and selling silver jewelry, it is related to your taxable activity.
2. **Documentation:**
- Keep proper records of the rent agreements, invoices, and service tax payments. Proper documentation is crucial to substantiate the input credit claim.
3. **Reconciliation:**
- Regularly reconcile the input service tax credits with your service tax payable to ensure accurate reporting and compliance.
### **Conclusion:**
Based on the nature of your business and the use of the rented premises, you **can** claim input service tax credit on the rent paid, provided that the premises are used for taxable business activities. You can then set off this input service tax credit against the service tax payable on the rental income you receive from leasing out your showroom.
Your CA's advice might be based on the specific interpretation of the rules or a concern that the rent received may not be directly linked to the core business activities. However, generally, as long as the rented premises are used for business operations, the input credit on rent paid is typically allowed.
**Important:** Consult with a tax professional to ensure compliance with the latest regulations and for specific advice tailored to your situation.
### **Service Tax Set-Off on Rent**
1. **Service Tax on Rent Payments:**
- If you are paying rent to third parties (like Pantaloon, TRENT, etc.) and the rent includes service tax, you can claim input credit on the service tax paid as long as the rented premises are used for providing taxable services or for business purposes related to the production or sale of goods.
2. **Service Tax on Rent Received:**
- When you lease out your own showroom and charge rent along with service tax to your tenants, you need to pay the service tax on the rent received to the government.
### **Conditions for Set-Off:**
- **Directly Linked to Business:**
- The service tax paid on rent for premises used in the course of your business can be set off against the service tax payable on rental income received. This is because the premises are used for conducting business operations, and the expenses are considered part of the business costs.
- **Input Tax Credit Rules:**
- Under the Service Tax rules, input tax credit (ITC) can be claimed for the service tax paid on inputs and input services used for providing taxable output services. Since your core business is the manufacture and sale of silver jewelry, if the rented premises (where you pay rent) are used in connection with this business, you are allowed to claim the ITC.
### **Key Points to Note:**
1. **Eligibility:**
- You must ensure that the rented premises are used in the business operations and not for exempt activities. For example, if the showroom is used for displaying and selling silver jewelry, it is related to your taxable activity.
2. **Documentation:**
- Keep proper records of the rent agreements, invoices, and service tax payments. Proper documentation is crucial to substantiate the input credit claim.
3. **Reconciliation:**
- Regularly reconcile the input service tax credits with your service tax payable to ensure accurate reporting and compliance.
### **Conclusion:**
Based on the nature of your business and the use of the rented premises, you **can** claim input service tax credit on the rent paid, provided that the premises are used for taxable business activities. You can then set off this input service tax credit against the service tax payable on the rental income you receive from leasing out your showroom.
Your CA's advice might be based on the specific interpretation of the rules or a concern that the rent received may not be directly linked to the core business activities. However, generally, as long as the rented premises are used for business operations, the input credit on rent paid is typically allowed.
**Important:** Consult with a tax professional to ensure compliance with the latest regulations and for specific advice tailored to your situation.
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