07 June 2011
B receive the Guest House from A (Owner of the Guest House) @ of monthly rent of 85000/-(per month). B then give the guest house on Rent to C @ 260000/- per month. i)Is A should charge Service Tax on Bill to B amounting 85000/-.
** He deduct TDS 8500/- on Rent.
ii) Is B should charge Service Tax on Bill to C amounting 260000/-.
** He deduct TDS 26000/- on Rent.
Please advice since both A & B are not registered to Service Tax.
08 June 2011
The TDS is deducted under Income Tax law. The service tax is chargeable under service tax law under rent from immovable property service. In the facts given A rent the guest house to B and B also rent the guest house to C. A should charge service tax at 10.3% on 85000 to B and B should charge service tax at 10.3% on 260000/- to C. As B has paid service tax to A, B can take credit against service tax collected from C. Therefore both A and B should be registered under service tax law and accordingly.
CAclubindia
