Service Tax on Rental Income
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
21 September 2010
Dear Sir/ Mam,
In FA 2010, The service tax on rent has been retropestively introduced from 2008, but on demanding the service tax from the tenants ,on the above basis ,they refused to give the same on the grounds that no notification / bill has not been passed yet.
I consulted a CA regarding the same and he gave me the same opinion which was "Unlike Custom and Excise, any increase or Imposition of Service Tax by Finance Bill is not applicable till the Bill is passed."
I want to know whether the finance bill regarding the same has been passed and if yes what is the notification number and date (which I can forward to my Tanents as a proof).
What solutions are available to me if the service tax was payable and the same has been defaulted on my part to avoid penality and Interest.
Regards
In FA 2010, The service tax on rent has been retropestively introduced from 2008, but on demanding the service tax from the tenants ,on the above basis ,they refused to give the same on the grounds that no notification / bill has not been passed yet.
I consulted a CA regarding the same and he gave me the same opinion which was "Unlike Custom and Excise, any increase or Imposition of Service Tax by Finance Bill is not applicable till the Bill is passed."
I want to know whether the finance bill regarding the same has been passed and if yes what is the notification number and date (which I can forward to my Tanents as a proof).
What solutions are available to me if the service tax was payable and the same has been defaulted on my part to avoid penality and Interest.
Regards
21 September 2010
Yes , Finanace bill in this respect has been passed. The letter from CBEC, DOF No. 334/1/2010-TRU,dt 26th, Feb clarifies this aspect.
However the hon'ble Delhi and Andhra Pradesh High courts have granted interim stay on the operation of these retrospective amendments.
My suggestion for paying the service tax is to wait till the decesion of above courts.
However the hon'ble Delhi and Andhra Pradesh High courts have granted interim stay on the operation of these retrospective amendments.
My suggestion for paying the service tax is to wait till the decesion of above courts.
21 September 2010
Agree with the expert.
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 January 2012
Dear Experts,
What is current status of Service Tax on rent of Commercial Property.
Few days back I heard there is some judgement from Supremem court of India which confirms the retrospective ammendement and all the assesses are liable to pay service tax from 2007-08.
Kindly suggest me regarding the same.
Thanks and Regards
CA Apurv Agarwal
What is current status of Service Tax on rent of Commercial Property.
Few days back I heard there is some judgement from Supremem court of India which confirms the retrospective ammendement and all the assesses are liable to pay service tax from 2007-08.
Kindly suggest me regarding the same.
Thanks and Regards
CA Apurv Agarwal
24 July 2025
Here's a clear summary addressing your questions on **Service Tax on Rental Income** as per your conversation:
---
### 1. **Has the Finance Act / Finance Bill passed the Service Tax on Rent retrospectively?**
* **Yes, the Finance Act 2010 introduced service tax on renting of immovable property retrospectively from 01-07-2008.**
* However, the **imposition was challenged in courts** (Delhi High Court, Andhra Pradesh High Court), which granted **interim stay on the retrospective levy**, creating uncertainty.
* The Central Board of Excise & Customs (CBEC) clarified the position via letters (e.g., DOF No. 334/1/2010-TRU dated 26th Feb 2010), confirming that the retrospective amendment is in force but under judicial review.
---
### 2. **Tenants refusing to pay service tax citing lack of notification/bill passage?**
* Service tax changes come through the **Finance Act**, which is a law passed by Parliament — NOT just notifications. So, if Finance Act 2010 includes this, it is applicable unless stayed by courts.
* **Notifications provide procedural details**, but the **law (Finance Act)** is what empowers the levy.
* Since courts gave **interim stay**, tenants have grounds to contest payment until final verdict.
---
### 3. **Current status and Supreme Court judgment?**
* As of your 2012 query, there were rumors about the **Supreme Court upholding retrospective levy**.
* **No final Supreme Court judgment was widely publicized by then**, but subsequent rulings did clarify that retrospective levy applies — making assessees liable from 2008 onwards.
* **Assessees who delayed payment risk penalties and interest**, but can argue stay or contest depending on timing.
---
### 4. **What can you do to minimize penalty/interest risk?**
* **Voluntary Disclosure and Payment:** If you believe tax is due, consider disclosing the liability voluntarily and pay with interest to minimize penalty risk.
* **Stay Updated on Judicial Decisions:** Courts' rulings can grant relief or confirm liability.
* **Seek Professional Advice:** Since retrospective law changes can be complex, engage a tax consultant or lawyer.
* **Maintain Records:** Keep proof of all communications and legal notices.
---
### 5. **Relevant Notifications and Rules:**
* Finance Act 2010 (effective July 2008)
* CBEC Circular DOF No. 334/1/2010-TRU, dated 26-Feb-2010
* Service Tax Rules and Notifications related to renting of immovable property
---
**In essence:** Service tax on rent was introduced retrospectively by law, but interim judicial stays meant tenants initially refused payment. Over time, courts started upholding the tax liability, making defaulters liable for back taxes with interest and penalty.
---
If you want, I can help draft a formal note or letter to your tenants explaining the position, or guide you on next steps depending on your situation. Would that help?
---
### 1. **Has the Finance Act / Finance Bill passed the Service Tax on Rent retrospectively?**
* **Yes, the Finance Act 2010 introduced service tax on renting of immovable property retrospectively from 01-07-2008.**
* However, the **imposition was challenged in courts** (Delhi High Court, Andhra Pradesh High Court), which granted **interim stay on the retrospective levy**, creating uncertainty.
* The Central Board of Excise & Customs (CBEC) clarified the position via letters (e.g., DOF No. 334/1/2010-TRU dated 26th Feb 2010), confirming that the retrospective amendment is in force but under judicial review.
---
### 2. **Tenants refusing to pay service tax citing lack of notification/bill passage?**
* Service tax changes come through the **Finance Act**, which is a law passed by Parliament — NOT just notifications. So, if Finance Act 2010 includes this, it is applicable unless stayed by courts.
* **Notifications provide procedural details**, but the **law (Finance Act)** is what empowers the levy.
* Since courts gave **interim stay**, tenants have grounds to contest payment until final verdict.
---
### 3. **Current status and Supreme Court judgment?**
* As of your 2012 query, there were rumors about the **Supreme Court upholding retrospective levy**.
* **No final Supreme Court judgment was widely publicized by then**, but subsequent rulings did clarify that retrospective levy applies — making assessees liable from 2008 onwards.
* **Assessees who delayed payment risk penalties and interest**, but can argue stay or contest depending on timing.
---
### 4. **What can you do to minimize penalty/interest risk?**
* **Voluntary Disclosure and Payment:** If you believe tax is due, consider disclosing the liability voluntarily and pay with interest to minimize penalty risk.
* **Stay Updated on Judicial Decisions:** Courts' rulings can grant relief or confirm liability.
* **Seek Professional Advice:** Since retrospective law changes can be complex, engage a tax consultant or lawyer.
* **Maintain Records:** Keep proof of all communications and legal notices.
---
### 5. **Relevant Notifications and Rules:**
* Finance Act 2010 (effective July 2008)
* CBEC Circular DOF No. 334/1/2010-TRU, dated 26-Feb-2010
* Service Tax Rules and Notifications related to renting of immovable property
---
**In essence:** Service tax on rent was introduced retrospectively by law, but interim judicial stays meant tenants initially refused payment. Over time, courts started upholding the tax liability, making defaulters liable for back taxes with interest and penalty.
---
If you want, I can help draft a formal note or letter to your tenants explaining the position, or guide you on next steps depending on your situation. Would that help?
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