Service tax on rental services

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pooja (Querist)
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22 May 2012 A company has crossed the limit of rs. 10,00,000 in december 2012 in respect of rental services.The company had applied for ST registration at that time and were registered in feb 2012 and paid service tax thereafter on 18th march 2012 for whole of the year.
Whether Interest will be charged on such delayed payment on 18th march 2012???

Arun Gulati

Arun Gulati (Expert)
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23 May 2012 first of all, you just crossed 10 lac limits first time, you are liable to pay service tax only on the amounts exceeding 10 lacs (for more details read notification no, 6/2005-ST). just try to take benefit of said notification. In my view, if you are not liable to pay service tax on first 10 lac. then there is no question arises for payment of interest thereon,in fact you paid the excess lumpsum tax. Now, you have also option to file refund application and claim back excess tax, you paid to govt.

Dayal

Dayal (Expert)
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23 May 2012 Adv. Arun has rightly pointed out
The rule says that registration by SSP to be applied after crossing 9 lacs.

Service tax is to be paid only on the amount which is in excess of 10 lacs.

For instance the total income earned is 10.60 lacs then service tax is payable on only on 0.60 lacs.

In the succeeding year, service tax becomes payable from the very first rupee of the rental income and the exemption stands withdrawn.

Revised returns can be filed within 90 days so you still have time.

Inform the department of the adjustment of credit within 15 days of such adjustments.

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pooja

pooja (Querist)
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23 May 2012 i am aware of this exemption but the company has opted to pay service tax for whole of the year because there will be a problem that from which parties this service tax will be recovered and from which parties it will not be recovered as the company is neither raising any invoice for the service nor the company is receiving rent on time???
Now suggest what will be the treatment??
and what are the consequences of non raising of invoices??

Arun Gulati

Arun Gulati (Expert)
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24 May 2012 even if you are not raising invoice (however, it is punishable offence) then also you can pay tax as per section 67 i.e. amt received shall be treated as inclusive of service tax and on the amount exceeding 10 lacs. , it is deemed to be inclusive of service tax. You would have paid the tax on such excess part. You must be making certain entries in your accounts and can easily make invoices from that and it is my suggestion also make invoices in your account, to save your cos from any future liability.

Legally speaking, you have 2 options:-

1) to file refund and also interest on delayed payment on service tax in excess of Rs. 10 lacs.

2) to pay interest on whole amt., otherwise what will department will scurtnised your returns and may issue you show cause notice for payment of interest and penalty thereon.

There is third option also that you can intimate to concern superintendent that you have wrongly paid the interest amount along with tax amt in tax code only. so that what ever tax you paid in excess that be adjusted with interest components.

but I think cos. like your is not like to struck in any legal dispute.

Dayal

Dayal (Expert)
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29 May 2012 You have all the records to establish your service income. Tabulate the same and work out the threshold limit.only your income which crosses the threshold limit is subject to service tax. It is not very difficult, as this exercise saves you from interest cost as well as excess service tax paid.why compromise on your earnings

Dayal

Dayal (Expert)
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