Service Tax Liability

[Asked by Guest]

I am going to pay ₹ 6,50,000/ to Municipal Authorities to convert my Residential property to Commercial property.

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

This amount is being paid as Conversion Charges & Parking Charges to Muncipal Authorities.

[KASTURI SETHI]

No. you cannot claim deduction on conversion and parking charges to arrive at Service Tax liability inasmuch as these are not taxes.

I am thankful to all of you who have replied & commented on my service tax liability for exemption on Conversion & Parking charges paid to MCD.

This was a residential property & only after paying these charges to Muncipal Corporation as Conversion Charges & Parking Charges,I am using it for commercial use & hence commercial rent.These charges are not taxes collected by Civic Authorities?

Moreover conversion charges will be deposited every year alongwith Property Tax.

So even that will not be the deduction I can claim?

AI Summary

Deductibility of municipal conversion and parking charges is not allowed in computing service tax liability.
Conversion and parking charges paid to municipal authorities to permit conversion of residential property to commercial use are municipal levies that are not taxes for the purpose of service tax computation and thus are not deductible from the taxable base; the annual payment of conversion charges alongside property tax does not make them deductible.