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Service tax- rent on immovable property

APUSACH (STUDENT) (75 Points)

04 June 2016

sir/madam, I have a doubt whether service tax is applicable for the below said case: Mr.A is the owner of an apartment which is given for Mr.B on lease and he is running a Paying guest in that apartment.Is Service Tax applicable?

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4 Replies

CA Shanky garg (Practicing Chartered Accountant) (217 Points)
Replied 04 June 2016

In my opinion , service tax will not be applicable on above since here property is let out by A to B i.e. A is providing service to B . B himself is not using the property might be the issue in your mind. In exemption the exemption is for Use as Residence.The other aspect that need to be examined is the period of stay? If the period of stay is temporary like in hotels ,Guest house etc then service tax will be applicable.

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 04 June 2016

No service tax is payable by Mr.A.
However for deciding about whether Mr.B will be liable to pay service tax or not will depend on facts and circumstance of the case. For example if it is let out to persons for use as residence then it will come under negative list of services. However, if it is let out to persons on per day rent basis just like hotels.guest house etc. then service tax is payable if the declared tariff per day is Rs.1000 or more.