Sir, I need your valuable support. My company having rent income is receiving advance rent at the time of signing contrat for 6 months and this is being adjusted some percentage in every month. Our practice is that we are paying service tax on monthly rent received including this adj. amount ( ST is not paid on advance received). Kindly suggest whether we should deposit ST on advance received or this practice is o.k. Thanks
Service tax on advance received
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Company Questions Service Tax on Advance Rent Payments Under Section 67(3), Seeks Clarification on Correct Practice A company receiving rental income is inquiring about the correct practice for paying service tax on advance rent payments. The company currently pays service tax on monthly rent, including adjusted advance amounts, but not on the advance itself. Three responses were provided: one states that under section 67(3), service tax should be paid at the time of receiving the advance; another suggests that if the advance is classified as a rent deposit, a different approach might be applicable; the third response concurs that service tax should be paid upon receipt of the advance. (AI Summary)