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Query regarding service tax on rent of immovable property to educational

APOORV JAIN (CA Final ) (69 Points)

17 August 2016

Hi Friends/ Sir/ Madam, 1. Is there any notification/circular in existance by which service tax on rent of immovable property to educational institutions is Exempt?? 2. if service tax is payable in the case, whether notification no.29/2012 is still in force by which service tax on rent can be reduced by amount of property tax paid on rented premises??

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178301 Points)
Replied 17 August 2016

1. Taxable.

2. Prop. tax deduction available

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APOORV JAIN (CA Final ) (69 Points)
Replied 19 August 2016

thank you sir for short sweet and to the point answer.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178301 Points)
Replied 19 August 2016

Thank you too for perfect response

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APOORV JAIN (CA Final ) (69 Points)
Replied 19 August 2016

further if i paid 12000 as property tax and my premises was also on rent for 12 month but due to threshold limit of 10lac, tax liability comes for jan, feb, march of the financial year,

what is the elgibility of property tax, whether i can take deduction of 12000 in month of January OR property tax for the month for which st is payable i.e. rs.3000 is allowable??

kindly elaborate!!!

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178301 Points)
Replied 19 August 2016

Actually, full amount is deducted in the same month when actually paid.

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APOORV JAIN (CA Final ) (69 Points)
Replied 19 August 2016

So, To conclude the same, with an example:- If im in receipt of rent on property for the month of March 2016 Rs..100000 (which was on lease for the whole year) and paid Rs.12000/-for the FY 2015-16 as property tax on 30th march,2016

ST LIABILITY FOR THE MONTH OF MARCH WILL BE =(100000-12000)*14.5%=>Rs.12760 INSTEAD OF Rs. 14500/-

Kindly Confirm the assertion, is it correct??

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178301 Points)
Replied 19 August 2016

Taking your monthly rent as Rs. 1 lakh, you are supposed to get registration with service tax department as soon as your rent exceeds 9 Lakhs.

So, your registration gets due in January,2016. Supposed you paid rs. 12K property tax anytime before 31st jan, 2016. You have not crossed your excempted limit of 10 lakhs.

So, from February 2016, you are supposed to charge service tax @ 15% including cess, over and above your rent exceeding 10L. So, rent amount including service tax would be appx 1.132 lakhs, for February and excacty 1.15L for March 2016, with your liability to pay the service tax so collected from tenant to treasury, before next 7th date.

Note: This 10 lakh basic exemption is only for first year. Once crossed, from next year you are liable to charge and pay service tax from first rupee rent itself.