A company is paying service tax under reverse charge method on Goods transport Agency and having RC for GTA services. Also rent is receiving from a customer and the rent received is below 10 lakhs. Whether service tax is required to be paid on the above rent received. Exemption limit of 10 lakhs can be apllied to the rent received without paying service tax.
Reverse Charge Mechanism: Service Tax Exemption Limit of 10 Lakhs Doesn't Apply to Service Recipients, Only Providers A company paying service tax under the reverse charge mechanism for Goods Transport Agency services inquires about the applicability of service tax on rental income below 10 lakhs. The response clarifies that the threshold exemption limit of 10 lakhs does not apply to service recipients under the reverse charge mechanism. However, as a service provider, the company can avail the exemption if it qualifies as a small service provider. Therefore, the company need not charge service tax on rental income until it reaches the threshold limit. Additionally, property tax paid can be deducted from the taxable rental income. (AI Summary)
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