Commercial Property Rent

Save Share

This query is : Resolved

Rajesh Rastogi (Querist)
Follow

14 January 2009 We are a lessee are having the following Clause in our lease agreement, the agreement was entered before service tax became applicable on rent;

"That the payment of rent as provide herein shall be subject to tax deducted at source as per the Income Tax Act, 1961 and rules framed there under and any other applicable laws as amended from time to time. Any Fresh taxes/additional levies imposed in respect to the rent payable shall be deducted as and when they become applicable."

Given the above clause, we as a Lessee are liable for service tax payment. Please advice.

CA. Mahesh Agarwal

CA. Mahesh Agarwal (Expert)
Follow

14 January 2009 Service tax liability is on the lessor only from the department point of view. So it is the lessor duty to pay ST to the Govt.
Now it is mutual contract that who will bear the burden of ST. Generally ST is recovered from the lessee.

Rajesh Rastogi

Rajesh Rastogi (Querist)
Follow

15 January 2009 Given the clause in my initial querry, literally speaking who will be liable as per the clause in the agreement?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
Follow

15 January 2009 As per the cited clause the lessee can deduct tax from rent. As far as Service Tax is concerned it is an addition to the rent. So you cannot escape from the payment of ST on the shelter of the said clause.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now