Example: - 12

Supply of services in relation to renting of immovable property takes place and as per agreement of rent of Rs. 1 Lakh , tenant will pay Municipal taxes of Rs. 10000 on behalf of owner. Whether such tax levied by local authority form part of value of Services for the purpose of GST?

Ans.

Section 15 of CGST act specifies that any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than CGST Act, the SGST Act, the UGST Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier shall form part of value of services. GST subsumed all taxes except property tax, entertainment and amusement tax to the extent levied by local bodies. Thus the local body tax levied by local authority shall form part of value of supply, thus GST would be chargeable on Rs. 1 lakh + Rs. 10000 = Rs. 110000.