Service Tax on rent

This query is : Resolved 

16 December 2009

1.When is service tax on rent applicable.(Is the Limit Rs.8,00,000)?
2.Is service tax applicable on Residential Rent?
3.Mr.X has commercial rental income from Place A - Rs.7,20,000 and Place B - Rs.6,00,000. Is service Tax applicable in this case.
Note: Assessee is assessed in Chennai and all queries are subject to Chennai

B.Chackrapani Warrier (Expert)
16 December 2009

Service tax on renting of immovable property is ultra vires the provisions of the act vide the judgement of Delhi High Court. The matter is sub judice before the Supreme Court. But, then, unless this decision is accepted by revenue, the matter is not free from doubt. In view of what is afore stated your query is left open with out a focused answer.

16 December 2009

Reading together definitions under Section 65(90a) and 65(105)(zzzz) reveal that rental income of immovable property used for residential purpose is out of service tax net as only rental income of immovable property used for furtherance of business is taxable from 01.6.2007.

The present threshold limit of exemption is 10 lakh vide Notification No. 6/2005-ST dated 01.03.2005 as amended.

Service tax on rental income both from place A and place b is applicable.

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 (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana).

Heera Nahariya (Expert)
16 December 2009

Immovable property like Banquet Hall is liable to service tax subject to the threshold exemption of Rs. 1000000.

Jitndr (Querist)
17 December 2009

The limit of 10 Lakhs is for one source of rent or it is the cumulative limit from various sources of rent

17 December 2009

Prior to 01.03.2005, there was no small scale exemption in the service tax as the exemption notification no. 6/2005-ST inserted from 01.03.2005 with 4 lakh limit which was enhanced to 8 lakh from 01.03.2007 and further enhanced to 10 lakh from 01.03.2008 vide notification no. 8/2008-ST.

The 10 lakh limit is for aggregate amount of all taxable services provided from one or more premises.

The section 69 prescribes primarily for getting registration of service providers who are liable to pay tax for reason of rendering taxable services but by virtue of sub section (2) the person who are in receipt of amount exceeding 9 lakh towards taxable services in the current financial year is required to get registration and follow the Service Tax (Registration of Special Category of Persons)Rules,2005.

Jitndr (Querist)
17 December 2009

Thank You every one. Especially Sanjay Sir

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