Eligible for Service Tax or Not

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Santosh Kumar Agarwal (Querist)
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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.

What are the Criteria of Service Tax deduction.

CA Unnikrishnan Nair N

CA Unnikrishnan Nair N (Expert)
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07 June 2011 Both may get registered and pay service tax. Tax paid by A is cenvat credit for B.

Santosh Kumar Agarwal

Santosh Kumar Agarwal (Querist)
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07 June 2011 Please explain

annapurna

annapurna (Expert)
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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.

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Santosh Kumar Agarwal

Santosh Kumar Agarwal (Querist)
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09 June 2011 Any other reply please.

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