Service TAx
This query is : Resolved
02 July 2010
Sir,
Service tax is applicable on building rent. if building is rent to an I T company who do work for their foreign client.
Please advice me Sir,
Thanks
Service tax is applicable on building rent. if building is rent to an I T company who do work for their foreign client.
Please advice me Sir,
Thanks
02 July 2010
The IT company is exporting service. It is using the rented accomodation to provide the said service.
The renting is not exempt. The IT company has to pay the tax and claim refund thereafter.
The renting is not exempt. The IT company has to pay the tax and claim refund thereafter.
02 July 2010
how can i claim refund?
24 July 2025
You're absolutely right to seek clarity. Here's a breakdown of your situation and how **refund of service tax** works when **renting immovable property to an IT exporter**:
---
### ✅ **Key Facts from Your Query**
* Service tax was **levied on rent of commercial building**.
* The tenant is an **IT company providing export of services** (likely software services or BPO/KPO).
* You want to know **how they can claim refund of the service tax paid**.
---
## 🧾 1. **Service Tax on Renting of Immovable Property**
Under the **pre-GST service tax regime**, **renting of commercial property** was a **taxable service**, with **service tax applicable at the prevailing rate** (e.g., 12.36%, 14%, 15% depending on the year).
So yes, **rent charged to the IT company is subject to service tax**.
---
## 🌍 2. **Export of Services by IT Company — Refund Eligibility**
Since the IT company is **exporting services**, they are eligible to **claim a refund** of service tax paid on **input services**, including **rent**, under:
### 👉 **Rule 5 of the CENVAT Credit Rules, 2004**, read with:
* **Notification No. 27/2012 – CE (NT) dated 18.06.2012**
* **Notification No. 41/2012 – ST dated 29.06.2012**
* **Circulars issued by CBEC clarifying export treatment**
This allows a **service exporter** to claim **refund of unutilized CENVAT credit** when they are **not charging service tax on output (as it is export)**.
---
## 📝 3. **Steps to Claim Refund of Service Tax (by IT Company)**
Here’s what **the IT company (tenant)** should do:
### Step 1: **Ensure Export Classification**
* Confirm their services are classified as **“Export of Services”** under **Rule 6A of Service Tax Rules, 1994**.
### Step 2: **Maintain Proper Documentation**
* Copy of rent agreements
* Invoices showing service tax paid
* Proof of payment
* FIRC (Foreign Inward Remittance Certificate) from foreign clients
* Bank realization certificates (if required)
### Step 3: **Avail CENVAT Credit**
* Claim CENVAT credit on the **input service of renting**.
* Show it in **ST-3 return**.
### Step 4: **File Refund Claim**
Under **Notification No. 27/2012 – CE (NT)**:
* File refund claim in **Form A** (prescribed under the notification).
* Submit to jurisdictional Service Tax office.
The claim must be **filed within 1 year** from end of the quarter in which the refund claim arises.
---
## 🛑 4. What If You (Landlord) Want to Claim Refund?
If you’re the landlord and mistakenly paid service tax, **you cannot claim refund**, unless:
* You did not pass on the tax burden (i.e., did not collect it from the tenant).
* You meet conditions under **Section 11B of the Central Excise Act**, including proving **no unjust enrichment**.
Mostly, in such cases, **refunds are processed only in favor of the IT exporter**, not the landlord.
---
## ✅ Summary
* **Service tax on rent** is **applicable**, even if rented to exporter.
* **Exporter (IT company)** can claim **refund** of service tax paid as input credit under **Rule 5 of CENVAT Rules**.
* Refund is available if:
* They file ST-3 returns,
* Maintain FIRC,
* Apply with proper documentation,
* Within 1 year of the end of quarter.
---
Would you like a **refund claim letter format** or **checklist** to assist the IT company with their refund application?
---
### ✅ **Key Facts from Your Query**
* Service tax was **levied on rent of commercial building**.
* The tenant is an **IT company providing export of services** (likely software services or BPO/KPO).
* You want to know **how they can claim refund of the service tax paid**.
---
## 🧾 1. **Service Tax on Renting of Immovable Property**
Under the **pre-GST service tax regime**, **renting of commercial property** was a **taxable service**, with **service tax applicable at the prevailing rate** (e.g., 12.36%, 14%, 15% depending on the year).
So yes, **rent charged to the IT company is subject to service tax**.
---
## 🌍 2. **Export of Services by IT Company — Refund Eligibility**
Since the IT company is **exporting services**, they are eligible to **claim a refund** of service tax paid on **input services**, including **rent**, under:
### 👉 **Rule 5 of the CENVAT Credit Rules, 2004**, read with:
* **Notification No. 27/2012 – CE (NT) dated 18.06.2012**
* **Notification No. 41/2012 – ST dated 29.06.2012**
* **Circulars issued by CBEC clarifying export treatment**
This allows a **service exporter** to claim **refund of unutilized CENVAT credit** when they are **not charging service tax on output (as it is export)**.
---
## 📝 3. **Steps to Claim Refund of Service Tax (by IT Company)**
Here’s what **the IT company (tenant)** should do:
### Step 1: **Ensure Export Classification**
* Confirm their services are classified as **“Export of Services”** under **Rule 6A of Service Tax Rules, 1994**.
### Step 2: **Maintain Proper Documentation**
* Copy of rent agreements
* Invoices showing service tax paid
* Proof of payment
* FIRC (Foreign Inward Remittance Certificate) from foreign clients
* Bank realization certificates (if required)
### Step 3: **Avail CENVAT Credit**
* Claim CENVAT credit on the **input service of renting**.
* Show it in **ST-3 return**.
### Step 4: **File Refund Claim**
Under **Notification No. 27/2012 – CE (NT)**:
* File refund claim in **Form A** (prescribed under the notification).
* Submit to jurisdictional Service Tax office.
The claim must be **filed within 1 year** from end of the quarter in which the refund claim arises.
---
## 🛑 4. What If You (Landlord) Want to Claim Refund?
If you’re the landlord and mistakenly paid service tax, **you cannot claim refund**, unless:
* You did not pass on the tax burden (i.e., did not collect it from the tenant).
* You meet conditions under **Section 11B of the Central Excise Act**, including proving **no unjust enrichment**.
Mostly, in such cases, **refunds are processed only in favor of the IT exporter**, not the landlord.
---
## ✅ Summary
* **Service tax on rent** is **applicable**, even if rented to exporter.
* **Exporter (IT company)** can claim **refund** of service tax paid as input credit under **Rule 5 of CENVAT Rules**.
* Refund is available if:
* They file ST-3 returns,
* Maintain FIRC,
* Apply with proper documentation,
* Within 1 year of the end of quarter.
---
Would you like a **refund claim letter format** or **checklist** to assist the IT company with their refund application?
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