Renting of Immovable Property

[PARVEEN ARORA]

Sir

One of the Limited company has given a portion in his Building Premises on rent 

Although all maintenance Charges bill were received for entire building (No segregation in bill was done)

on what basis I have to proportionate the cenvat credit on service tax payable on rent.

 

Kindly give your valuable opinion.

Thanks & regards 

 

 

 

[CABALRAM PANDEY]

Dear Arora Ji,

As per rule 4(7) of Cenvat Credit Rule, 2004, you can take the CENVAT Credit on Inputs, Capital Goods & Input Services, if they are in or in relation to Provision of output Services. Hence you need not to segregate maintenance and rent separately, rather you have to justify the one to one correlation with output & Input of Service Tax.

[PARVEEN ARORA]

Dear Pandey ji,

only  taxable service which company is providing is "Renting of Immovable  Property"

actually i have the doubt regarding the portion of cenvat to be claim ,

position was :  75 % of building was given on rent and 25 % was with company.

if company make one to one correlation , then it has to take cenvat credit of 75 % of service tax paid on bills of maintaince.

75% and 25 % was calculated on the basis of area (square feet) 

Kindly give your  valuable opinion

Thanks and regards

[CABALRAM PANDEY]

 Yes, Arora Ji you are right now, CENVAT Credit on inputs, Capital Goods & Input Services will be available to the extent they are used in providing output services. Hence CENVAT shall be available only on 75% the Service Tax paid on maintenance bill. One thing you please note down that if the maintenance is of the nature of Work Contract then no CENVAT on input services will be available to you. i a giving you a link please follow:-

For further query you can mail me at [email protected]

Thanks & Regards

[PARVEEN ARORA]

Dear Pandey ji,

Kindly provide me the link for non-availment of credit on work contract .

[CABALRAM PANDEY]

 

Credit on Input Service	Whether Credit can be taken against Output Service
	Works Contract(Including Maintenance or Repair)	Construction of Complex	Renting of Immovable Property
Works Contract	Yes	Yes	No
Man Power Supply	Yes	Yes	Yes
Commission/Brokerage		Yes	Yes
Professionals/Legal Consultancy	Yes	Yes	Yes
Telephone Bills	Yes	Yes	Yes
Other Services	Yes	Yes	Yes

AI Summary

Cenvat credit apportionment: credit allowed to extent of use for renting services; excluded where maintenance qualifies as works contract. CENVAT credit on inputs, capital goods and input services is available only to the extent they are used in relation to provision of the taxable output service; where maintenance charges are billed for an entire building, credit may be proportionately allocated by demonstrating one-to-one correlation with the output (for example by area-based allocation for rented portions). If maintenance qualifies as a works contract, input service credit is not available for that portion.