Rent received from govt company & temple

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 October 2011 Is service tax applicable to rent received from govt company & Temple?

My client has not collected service tax from govt company (Aavin) & Temple (Murugan koil) in respect of rent

Pls clarify me this procedure s correct r not?

Guest

Guest (Expert)

13 October 2011 Aavin is a government company engaged in business and should not be equated with government. Tax is payable on rental receipt.
Temple is a religious body. Renting by or to a religious body is not a taxable service.

Querist : Anonymous

Querist : Anonymous (Querist)

14 October 2011 May i know any notification regarding service tax applicablility to the govt company like aavin

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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21 July 2025 This is a very valid and nuanced question involving service tax on rent received from:

A government company (e.g., Aavin), and

A religious body (e.g., Murugan temple)

Let’s address both and then cite relevant rules/notifications.

✅ 1. Rent Received from Government Company (like Aavin)
▶ Is service tax applicable?
✅ YES, service tax is applicable.

Explanation:

Aavin, although a government-owned company, is not exempt from service tax simply because of government ownership.

It is a commercial entity engaged in business (e.g., milk production/distribution).

Renting of commercial property to any business entity, even a PSU or govt company, is taxable under service tax laws.

▶ Relevant Notification / Clarification:
There’s no blanket exemption for government companies.

Under the Finance Act, 1994, renting of immovable property for commercial use was a taxable service.

Notification No. 25/2012–ST, dated 20.06.2012 (Mega Exemption), does not exempt renting to government companies.

📌 Conclusion:
✔️ Your client should have charged and paid service tax on rent from Aavin.
❌ Not charging service tax is not correct, unless turnover is below the exemption threshold (then too, registration conditions apply).

✅ 2. Rent Received from Temple (Religious Body)
▶ Is service tax applicable?
❌ NO, if renting is for religious purposes.

Explanation:

Renting of immovable property by or to a religious body or for religious use is exempt under Notification No. 25/2012–ST, Entry 5(b).

▶ Exemption covers:
Renting of precincts of a religious place meant for the general public.

Only applicable if the property is used for religious or charitable purposes (not commercial).

📌 If the temple uses the premises for religious/charitable functions → Exempt.
📌 If they sub-let or run a commercial canteen/shop → Then service tax may apply.

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