Those who are yet to pay their service tax dues (as on March 6, 2012) on rent received in excess of Rs 10 lakh a year from immovable property are liable to pay a penalty after November 27.

The tax applies to renting of commercial property, where the rental amount exceeds the exemption limit of Rs 10 lakh per annum. Present rules, however, exempt renting of immovable property to educational institutions from service tax. Renting of residential property, regardless of the rental amount, is also exempt from service tax.

The Finance Act of 2012 provided that no penalty will be imposed for failure to pay service tax payable as on the 6th day of March, 2012, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President.

Since the Presidential nod was received on May 28, the term for getting relief will be over on November 27. So, anyone who has not paid the dues will have to pay penalty, which could be up to a sum equal to the amount of tax due. Bipin Sapra, Tax Partner, Ernest & Young, feels that people should pay up the dues as there is no rationale to building up liability. (The Hindu)