DEAR SIR,
I AM FACING DIFFICULTY IN INTERPRETATING THE NOTIFICATION 24/2007 DATED 22-05-2007- SERVICE TAX REPRODUCED BELOW
Notification No. 24/2007 – Service Tax
G.S.R. (E). In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of renting of immovable property, referred to in sub-clause (zzzz) of clause (105) of section 65 of the Finance Act, from so much of the service tax leviable thereon as is in excess of the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies:
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, property tax proportionate to the period for which service tax is paid 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.
ITS STATES ABOUT LEVEY MY DOUBT IS,
WHETHER LESSOR NEEDS TO COLLECT LESS SERVICE TAX AFTER AVAILING EXEMPTION OR AFTER COLLECTION PROPERTY TAX CAN BE ADJUSTED
IF WE CONSIDERED THAT AFTER COLLECTION IT TERMED TO BE SERVICE TAX COLLCTION AND MAY ATTRACTS SEC 73A IN WHICH EXCESS COLLECTION PROVISION WILL ATTRATCTS.
IF LESSOR AVAILED BENEFITS AFTER COLLECTING ENTIRE SERVICE TAX COMPONENT FROM TENETS WHETHER SAME BEING REIMBURSEABLE TO TENENT OR TERMED TO BE REVENUE RECEIPT UNDER INCOME TAX ACT 1961,
OR SAME WILL BE TERMED TO BE CAPITAL RECEIPT IF THE ASSESSEE TERMED RENTALS AS BUSINESS INCOME OR INCOME FROM LET OUT PROPERTY.
CONTRADICTORY NOTIFICATION REGARDS RULE 6(4)(C) STATES IF PAID WITHOUT AVAILING BENEFIT SAME CAN BE CONSIDERED BEFORE EXPIRY OF ONE YEAR FROM PAYMENT OF MUNICIPAL TAX , IF WHOLE AMOUNT COLLECTED FROM LESSEE AND PAID AFTER SAME CAN BE ADJUSTABLE ?? ON THAT CIRSUMSATANCES SAME NEEDS TO REFUNDABLE TO TENENTS OR TO DEPARTMENTS OR BE TREATED AS INCOME UNDER INCOME TAX ACT 1961.????
PLEASE CLARIFY >>>
CAclubindia
