Exemption on property tax paid on immovable property; Notification No. 29/2012- Service Tax, dt 20 June 2012,

1. In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994

 2.  And in supersession of the notification No. 24/2007-Service Tax, dated the 22^nd May, 2007, published except as respects things done or omitted to be done before such supersession

            3. This notification shall come into force on the 1^st day of July, 2012.

Exempts the taxable service of renting of an immovable property, from so much of the service tax leviable thereon under section 66B of the said Finance Act,

In excess of the service tax calculated on a value:

A. Which is equivalent to the gross amount charged for renting of such immovable property

B. Less: Taxes on such property, namely property tax levied and collected by local bodies:

(In Short, the value of property tax paid/ Payable for the period shall be reduced from the Taxable Value)

Illustration:

Property Tax Paid or Payable for April:  Rs 2,000/-

Rent Received for April: Rs 1,00,000/-

Taxable Value of the service =Rs 98,000/- ( Rs 1,00,000 - Rs 2,000)

           

Note:

1. Amount such as interest, penalty paid to the local authority by the service provider on account of delayed payment of property tax or any other reasons shall not be treated as property tax for the purposes of deduction from the gross amount charged.

           

2. Wherever the period for which property tax paid is different from the period for which service tax is paid or payable, property tax proportionate to the period for which service tax is paid or payable shall be deducted from the Gross amount.