Registration of service tax
This query is : Resolved
15 September 2012
We are a registered Partnership firm carrying on business of real estate development . Couple of years ago we had constructed a residential building in which we have retained some residential flats. We have shown the flats as Fixed Assets in our Balance Sheet. We are giving the same on Leave & License basis to MNC for residential purposes. Our rental income exceeds Rs. 9 Lacs p.a. The Income Tax Department is assessing our rental income under the head Income from Business & Profession. We wish to know whether we are liable to obtain service tax number and /or pay service tax.
CA CS Amit S. Kedia
(Expert)
15 September 2012
Simply, if the residential property is used for residence then it is covered by the negative list of service and not liable for service tax.
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15 September 2012
CA Amit, We wish to know are we liable to obtain service tax number.
CA CS Amit S. Kedia
(Expert)
15 September 2012
Registration is not required if there is no taxable service.
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15 September 2012
CA CS Amit,
We are a registered Partnership firm carrying on business of real estate development . Couple of years ago we had constructed a residential building in which we have retained 4 residential flats, out of which 3 flats were/are given on leave and license basis. The 4th flat is used by the partners for personal use and is shown vacant in our Balance Sheet. We have shown the flats as Fixed Assets in our Balance Sheet and claiming Depreciation on all the 4 flats. The Income Tax Department is assessing our rental income under the head Income from Business & Profession. We wish to know whether Income Tax Department can calculate notional rent (Annual Value) on the 4th flat which is not given on rent. Kindly advice
We are a registered Partnership firm carrying on business of real estate development . Couple of years ago we had constructed a residential building in which we have retained 4 residential flats, out of which 3 flats were/are given on leave and license basis. The 4th flat is used by the partners for personal use and is shown vacant in our Balance Sheet. We have shown the flats as Fixed Assets in our Balance Sheet and claiming Depreciation on all the 4 flats. The Income Tax Department is assessing our rental income under the head Income from Business & Profession. We wish to know whether Income Tax Department can calculate notional rent (Annual Value) on the 4th flat which is not given on rent. Kindly advice
CA CS Amit S. Kedia
(Expert)
17 September 2012
No, Income from such property can not be taken notional basis. Since the income from property is being taxed under the head "income from business & profession".
However, it will be rent free accomodation for directors and perquisite tax will be there in hands of directors and company is liable for TDS.
However, it will be rent free accomodation for directors and perquisite tax will be there in hands of directors and company is liable for TDS.
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