Friday, June 15, 2007

PROPERTY TAX PAID TO LOCAL BODIES ALLOWED AS DEDUCTION

Central Board of Excise & Customs (CBEC) has clarified that service tax is payable on the rental amount received less the actual amount of property tax paid in case of renting of immovable properties for commercial use. In other words, the property tax paid to local bodies can be deducted from the rental amount and the service tax be paid on the net amount. However, no deduction would be allowed on any interest, penalty paid to the local authority by the service provider on account of the delayed payment of property tax. In a situation where property tax is paid after the payment of service tax on the rental and, therefore, deduction of property tax paid for rental could not be availed at the time of service tax payment, self-adjustment of excess service tax paid can be done up to a year.  

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