SERVICE TAX ON CONVERSION PREMIUM

[abbas mukhi]

Dear Sir,

whether Conversion premium received on converting lease hold properties into free hold property is liable for Service Tax??

Thanks

[KASTURI SETHI]

Sir,

No. Conversion of lease hold property into free hold property is not service in terms of Section 65 B(44) of the Finance Act, 1994. It is in the exclusion clause (a) of Section 65 B(44). Hence not liable to Service Tax.

[Ganeshan Kalyani]

I agree with views submitted by Kasturi sir.

[KASTURI SETHI]

In Chandigarh Commissionerate who paid Service Tax on conversion charges for conversion into free hold applied for refund and got sanctioned. I have no proof with me.

[DR.MARIAPPAN GOVINDARAJAN]

Yes the views are correct in my opinion.

[Guest]

Dear Expertise,

Can you please guide me whether iam laible to pay the service tax on ROYALTY ,if iam using the brand name of the USA for which royalty is paid.

[KASTURI SETHI]

Dear Akbar Basha,

With reference to your query dated 18.12.15, you are liable to pay Service Tax under category of "Intellectual Property Services" specified under Section 65(105) (zzr) (Now Other Than Negative List) read with Notification No.30/12-ST dated 20.6.2012 as amended. (Serial No.10) under Reverse Charge Mechanism. 100% liability is on you as Service Receiver, being in taxable taxable territory.

[Guest]

NOTED WITH MANY THANKS SIR.

AI Summary

Conversion Premium for Leasehold to Freehold Exempt from Service Tax Under Section 65 B(44) of Finance Act 1994 A forum participant inquired whether a conversion premium for changing leasehold properties to freehold is subject to Service Tax. Respondents clarified that such conversion is not considered a service under Section 65 B(44) of the Finance Act, 1994, and is thus exempt from Service Tax. One contributor mentioned a case in Chandigarh where a refund was sanctioned for Service Tax paid on conversion charges. Another participant asked about Service Tax on royalties for using a US brand name, and it was explained that such royalties fall under 'Intellectual Property Services' and are subject to tax under the Reverse Charge Mechanism.