Abatement in Service Tax for the amount paid as Municipality Tax

[Sumit Sharma]

I want to know the notification No. applicable for Abatement in Service Tax for the amount paid as Municipality Tax. Service is - Renting of Immovable Properties.

[YAGAY and SUN]

While calculating value, the property tax paid can be deducted and on the balance service tax payable. Proportionate deduction is allowed on property tax. For instance, if property tax of say Rs. 12,000/- is paid for June to December (i.e.for six months) then deduction of Rs. 1000 per month can be claimed while paying service tax. Text of Notification no. 24/2007 is relevant in this regard.  Further, no deduction is permissible for interest/penalty paid in relation to such property tax.

AI Summary

Abatement in service tax for municipal property tax: proportionate deduction permitted; interest and penalties excluded.
Abatement in service tax for renting of immovable property permits deduction of municipal/property tax paid from the taxable value by way of proportionate apportionment to the relevant period; the balance after this deduction is subject to service tax. Amounts paid as interest or penalty relating to property tax are expressly not deductible. A specific abatement notification is referenced as governing this rule.