Renting of immovable property
This query is : Resolved
18 February 2013
Is it necessary to take registration separately for each co-owners where no separate bill is issued and no separate agreement by each co-owner with the tenant exists? The gross rent received annually exceeds 10 Lakhs, but not so for each co-owner.
In the present case, the tenant is a big pvt ltd company having almost 100 rental agreements across the country. In every case, they are paying service tax on behalf of the building. Co-owners/landlords are not registered with the service tax. Is reverse charge mechanism applicable here?
In the present case, the tenant is a big pvt ltd company having almost 100 rental agreements across the country. In every case, they are paying service tax on behalf of the building. Co-owners/landlords are not registered with the service tax. Is reverse charge mechanism applicable here?
18 February 2013
Owner of the property will pay the service tax on renting of immovable property. It will not fall under the reverse charge system. Recipient of services will not pay the service tax on renting of immovable property.
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18 February 2013
does it mean that co-owners have to take registration individually or any other option? whether exemption is available in such situation?
18 February 2013
Co-owners can take the registration and they can paid service tax.
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18 February 2013
can it be treated as BOI?
21 July 2025
Great question about co-owners and service tax registration for renting immovable property! Here’s a clear breakdown:
Key points:
Separate registration for each co-owner?
Yes, generally each co-owner who is receiving rent individually and whose turnover exceeds the threshold (₹10 lakhs for service tax) needs to take separate registration.
This is because service tax liability and compliance are on the person/entity providing the service (i.e., the landlord).
No separate agreement or bill issued by each co-owner:
If there is a single agreement with the tenant and the tenant pays rent collectively, but payments are made to co-owners in proportion, technically each co-owner is a separate service provider.
But since no separate agreement or billing exists, practically, each co-owner should ideally have their own registration to pay service tax on their share.
Is reverse charge mechanism (RCM) applicable?
No, renting of immovable property service is NOT under reverse charge for the recipient (tenant) as per service tax rules.
The landlord (service provider) pays service tax, not the tenant.
Can co-owners be treated as BOI (Body of Individuals)?
This is an interesting option:
If co-owners form a registered BOI and have a single PAN and service tax registration, they can be treated as a single entity for service tax purposes.
However, BOI has to be registered formally, with a partnership deed or agreement governing the entity.
The BOI can then raise a single invoice and pay service tax collectively.
Exemptions or threshold applicability:
The service tax exemption threshold (₹10 lakh turnover) applies individually to each co-owner unless they are combined under a registered BOI.
Without registration, technically the co-owners are non-compliant if turnover exceeds ₹10 lakhs.
Key points:
Separate registration for each co-owner?
Yes, generally each co-owner who is receiving rent individually and whose turnover exceeds the threshold (₹10 lakhs for service tax) needs to take separate registration.
This is because service tax liability and compliance are on the person/entity providing the service (i.e., the landlord).
No separate agreement or bill issued by each co-owner:
If there is a single agreement with the tenant and the tenant pays rent collectively, but payments are made to co-owners in proportion, technically each co-owner is a separate service provider.
But since no separate agreement or billing exists, practically, each co-owner should ideally have their own registration to pay service tax on their share.
Is reverse charge mechanism (RCM) applicable?
No, renting of immovable property service is NOT under reverse charge for the recipient (tenant) as per service tax rules.
The landlord (service provider) pays service tax, not the tenant.
Can co-owners be treated as BOI (Body of Individuals)?
This is an interesting option:
If co-owners form a registered BOI and have a single PAN and service tax registration, they can be treated as a single entity for service tax purposes.
However, BOI has to be registered formally, with a partnership deed or agreement governing the entity.
The BOI can then raise a single invoice and pay service tax collectively.
Exemptions or threshold applicability:
The service tax exemption threshold (₹10 lakh turnover) applies individually to each co-owner unless they are combined under a registered BOI.
Without registration, technically the co-owners are non-compliant if turnover exceeds ₹10 lakhs.
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