Service Tax Liability

[Guest]

I was having a residential property & from 1st April I gave it on rent for Commercial Use.I will be paying abt.Rs6,50,000/ for conversion & parking charges.

Can I claim this as deduction for computing my Service Tax Liability.

[JSW CEMENTLIMITED]

Kindly determine if the said service of conversion and parking fees are used for provision of service renting of immovable property, if it is so, then you can avail service tax credit and adjust the same towards your service tax liability.

[Vijay kumar]

Your query is not clear as to whom you are paying the amount of ₹ 6.5 lakhs and whether the service provider has paid the service tax on such conversion & parking charges. In any case, please note that service tax is levied on the gross value charged for the service, as per Section 67 of the Finance Act, 1994. In respect of renting, only property tax paid to the local authorities is deductible. Accordingly, gross rent - property tax will be the taxable value. You cannot claim any abatement / deduction of the conversion / parking charges.

[bhart b sharma]

section 67 of Finance Act, 1994 read with Rule 6 of the Service Tax (Determination of Value) Rules, 2006 appears not to grant any such exemption. vide notification no.. 24/2007-ST dated 22.05.2007, only exemption provided is in respect of Property Tax paid.

[KASTURI SETHI]

I agree with Mr.Vijay Kumar and Bhart b.Sharma in toto. Such fool proof advice enhance knowledge of everybody whether assessee or not.

AI Summary

Service tax on renting of immovable property: conversion and parking fees are not deductible; only property tax deduction applies. Conversion and parking fees paid when a residential property is let for commercial use are not deductible from the gross value of renting for service tax valuation; only property tax paid to local authorities is deductible. If the conversion and parking charges constitute taxable services used in providing the renting service and service tax was paid on them, input tax credit may be available to adjust against service tax liability.