SERVICE TAX ON LEASE RENT

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ASHISH KUMAR PATRO (Querist)
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26 December 2009 ONE OF MY CLIENT IS GETTING LEASE RENT AMTING 150000/- PER MONTH, WHICH INCLUDES RS.120000/- FOR RENT ON BUILDING AND RS.30000/- FOR MACHINERY,
SO PLZTELL ME ON WHICH BASIS I AM LIABLE FOR CHARGING SERVICE TAX AND ON WHAT AMOUNT AND AT WHAT RATE???

SANJAY JAIN

SANJAY JAIN (Expert)
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02 January 2010 The service tax provisions as stand now seek the service tax on renting immovable property for the furtherance of business. Hence tax liability on Rs. 1.2 lakh is not under dispute.

Secondly, regarding service tax on receiving rent for machinery, please note that the service tax has been imposed on supply of tangible goods, machinery for use without transferring right of possession and effective control. If the facts satisfy the above parameter, the service tax is applicable otherwise the state VAT is applied as constitutionally transfer of the right to use any goods is deemed sale and liable to sale tax.

Though the constitutional validity of levy of service tax upon immovable property is under question before the Supreme Court being Delhi high court decision has been challenged by Revenue in which to the best of knowledge, no stay has been granted.

For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana).

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