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Service Tax on Rental Property

priti (artist) (49 Points)

18 April 2010

Namaste,

I am registered for service tax for renting of immovable properties. I have 2 tenants in my commercial building. Both have stopped paying Service Tax. Our CA’s advice was that I pay from my pocket to avoid interests, penalties and claim later. Since April 09-0ct 09 I have paid from my pocket anticipating that the total rent would cross 10 lacs. However, in Sept. 09 one tenant vacated and the total rental income did not cross 10 lacs.

1. Should I file a NIL half yearly ST3?

2. Do I come under exemption category for 2009-2010?

3. Since service tax on immovable property was retrospectively amended. Should I collect service tax from my new tenant and old tenant from April 2010? Because the rental income will cross 10 lacs if I have a new tenant.

Thanks in advance for all your help.

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1 Replies

P.Bashista (Advocate) (367 Points)
Replied 20 April 2010

Your CA is right. You should deposit the tax, whether u collect it or not.

The system of availing SSI exemptions goes like, for example:

in the financial year 2008-09 you are expecting that your rental income will cross 10 lacs and it reaches 12 lacs. You take d registeration and pay d duty on the diff of 2 lacs only.

but in the year 2009-10 if your income is only 6 lacs, you need to pay service tax on the whole 6 lacs.

And if in the year 2010-11 your income still remains below 10 lacs u will then take the SSI exemption again and file a nil return.

Basically you are suppose to file the return on the basis of your previous financial year.

I hope that this is now clear to you.