Service tax levy - point of taxation rules
This query is : Open
11 September 2015
An assessee provides service of renting of immovable property for short term for conducting programs, events, etc.
For renting the immovable property to a party, they conduct draw.
The parties who want to take the property on rent will apply to our assessee while paying for four months' rent in advance.
After the draw, the assessee will refund the amount collected from the parties to all except the party to whom the immovable property is let out as per draw results.
It is to be noted that the service is not given until the draw is completed. And the invoice is also not issued until the party transfers the possession back to the assessee.
Now the query is -
1.At what time service tax is to be levied on the amount so collected for rent?
2. If on advance, whether service tax is to be levied on advance collected from all parties or only the party to whom property is let out as per draw, as service may not be given to those parties who lose in the draw.
For renting the immovable property to a party, they conduct draw.
The parties who want to take the property on rent will apply to our assessee while paying for four months' rent in advance.
After the draw, the assessee will refund the amount collected from the parties to all except the party to whom the immovable property is let out as per draw results.
It is to be noted that the service is not given until the draw is completed. And the invoice is also not issued until the party transfers the possession back to the assessee.
Now the query is -
1.At what time service tax is to be levied on the amount so collected for rent?
2. If on advance, whether service tax is to be levied on advance collected from all parties or only the party to whom property is let out as per draw, as service may not be given to those parties who lose in the draw.
11 September 2015
Pay service tax on advance received from the party to whom property is let out.
11 September 2015
Before the draw you are not receiving any advance. It is a type of security deposit. No Service Tax is required to be paid on this amount. Once draw is complete, you shall pay service tax based on the invoice issued to the person who is receiving renting service.
21 September 2015
Two experts seem to contradict each other. However, the later explanation that the amount received before draw is not advance seems to be more acceptable.
It requires references for backing the answer.
It requires references for backing the answer.
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