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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