Property Let Out for commercial use

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This query is : Resolved

Lakshmi (Querist)

03 October 2007 A Company is in the business of letting of property for commercial use.A relative of one of the Director intends to start a trading business at one of the properties owned by the Company and pay rent as a percentage of turnover.Can the Company avoid service tax libility by accepting rent as a percentage of turnover ? What about the TDS implications ?

R.V.RAO

R.V.RAO (Expert)

04 October 2007 SECTION 69 OF THE FINANCE ACT 1994 CASTS AN OBLIGATION ON THE SERVICE PROVIDER TO REGISTER UNDER SERVICE TAX ACT, PAY THE TAX AND FILE RETURNS.
THE THRESHOLD LIMIT FOR REGISTRATION IS RS. SEVEN LAKHS AND EXEMPTION LIMIT PER ANNUM IS RS. EIGHT LAKHS.
PL. CONVERT THE RENT AS A TURNOVER PERCENTAGE INTO ABSOLUTE MONETARY VALUE AND YOU KNOW THE ANSWER TO YOUR QUESTION.
AS FAR AS TDS,IF THE RECIPIENT IS /HUF/BOI/AOP AND IF THE AGGREGATE OF PAYMENT SUBJECT TO TDS DOES NOT EXCEED RS. TEN LAKHS P.A, THE RATE OF TDS IS 15.45%.IF IT EXCCEDS THE SAID LIMIT TDS APPLICABLE IS 16.995%
IF THE RECIPIENT IS OTHERTHAN ABOVE TDS RATES ARE 20.6% AND 22.66% RESPECTIVELY.
PL. SEE SEC 194-I UNDER TDS -RENT- FOR MORE DETAILS.
i did not cover applicability of the COMPANY'S ACT PROVISIONS FOR -RRELATIVE OF A DIRECTOR'S DEALINGS WITH THE COMPANY.IF YOU WISH TO KNOW ,PL. SEEK THE SAME SEPARATELY.
R.V.RAO