service tax on rent
Querist : Anonymous
we are paying a rent of Rs.100000/- to our warehouse landlord every month.
he is proprietor of warehouse under individual category.
any service tax will come for this please clarify.
with regards
Querist : Anonymous
WE COLLECTING FROM OUR PRINCIPLES SERVICE TAX AND PAYING TO DEPARTMENT.
IF OUR LANDLORD WE COLLECT THE SERVICE TAX ON OUR GODOWN RENT THEN ANY SET OFF IS THERE PLEASE CLARIFY.
You can however avail the credit of service tax paid against service tax payable on your taxable service.
Querist : Anonymous
from when will he collect the service tax(1.e. from apr'10 or from the service started of 200y . please clarify
if s then he can collect rent after the limit exceeds Rs. ten lakhs.
Querist : Anonymous
but the matter is pending in supreme court
Querist : Anonymous
in continuation to my query,
now my landlord is asking service tax on rent
from 2007,with interest.as per his auditor advise.
He is now only applied for registration with department.
please kindly advise me shall i pay the service tax from 2007 with interest and
how i will set-off the service tax.
Querist : Anonymous
---
### Situation Recap:
* You are paying Rs. 1,00,000 per month as rent to a landlord who is a proprietor (individual).
* Landlord is now asking for service tax on rent from 2007 onwards with interest, based on auditor’s advice.
* Landlord has only recently applied for service tax registration.
---
### Key points about **Service Tax on Rent (pre-GST era)**:
1. **Who pays service tax on rent?**
The **service provider** is the owner/landlord of the property. So, the landlord is liable to pay service tax on rent received from renting out immovable property (commercial or industrial).
2. **Threshold limit:**
Service tax registration and payment is mandatory only if the landlord’s **aggregate value of taxable services exceeds Rs. 10 lakhs per year**.
3. **Applicability from 2007:**
* Service tax on renting of immovable property (commercial) was introduced in stages.
* Before June 2010, service tax was generally not applicable on renting of immovable property except in some specific cases (like renting commercial complexes or industrial sites).
* So, demanding service tax from 2007 onwards may not be correct unless the landlord falls under the category of “Commercial Complex” or similar taxable service at that time.
4. **Registration & retrospective demand:**
* If landlord was liable for service tax earlier but did not register, the department can demand service tax with interest and penalty for delayed payment.
* However, you as tenant **should not pay service tax directly** to the landlord if not charged legally. Usually, landlord has to pay service tax to the government.
* If landlord insists on service tax, verify the demand’s validity and if it’s legally sustainable.
5. **Set-off of service tax:**
* As a tenant, you **cannot claim input credit or set-off** of service tax paid on rent because service tax on renting immovable property was a **non-creditable service** under the law (no input tax credit on rent service).
* Also, if you are not in the same service chain or sector, no input credit is available.
---
### What you should do:
* Verify if service tax on rent was applicable on your landlord’s property type since 2007.
* Check if the landlord was required to register and pay service tax during that period.
* If landlord insists on service tax recovery, get written confirmation and legal basis for the demand.
* Do **not pay** service tax unless landlord issues a valid invoice showing service tax charged.
* Consult a tax advisor or lawyer to analyze retrospective liability and correspondence with tax authorities.
---
### Summary:
| Question | Answer |
| -------------------------------- | ------------------------------------------------------------------------------------------- |
| Is service tax payable on rent? | Yes, if landlord exceeds Rs. 10 lakh threshold and property falls under taxable category. |
| Is it payable retrospectively? | Depends on law applicability; may not be from 2007 without proper basis. |
| Should tenant pay service tax? | No, landlord is responsible. Tenant pays rent only unless service tax is clearly mentioned. |
| Can tenant claim credit/set-off? | No, input credit is generally not available on rent service. |
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