Service tax on sub letting

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 May 2014 Respected sir,

My query is as under:

an individual person 'A' letting out his office premises to 'X - LLP' and subsequently X-LLP' has divide the total expense of rent into 5 various pvt ltd companies under sub letting agreement.

Is there requirement for X-LLP to charge service tax on rent amount to 5 pvt. ltd. companies on rent division ?

office owner gave bill without charging service tax.

if office owner charged service tax then ?

Sandeep Dharar

Sandeep Dharar (Expert)
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20 May 2014 According to Me ST should b charged on that amount. Well wait for other experts reply.

Vidya Jain

Vidya Jain (Expert)
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20 May 2014 Yaa, I agree with Sandeep Dharar. If the total bill exceeds threshold limit it should be chargeable to service tax.

Rupesh Jain

Rupesh Jain (Expert)
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21 May 2014 if the limit of rent is over then serives tax have to pay .

Querist : Anonymous

Querist : Anonymous (Querist)

21 May 2014 Thanks to all expert.

but x-llp is already in service sector and pay service tax on other service provided by it. then?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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24 July 2025 Here’s a clear breakdown of the service tax implications on sub-letting rent in your scenario:

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### Situation Recap:

* Individual **A** rents out office premises to **X-LLP**.
* **X-LLP** sub-lets parts of the premises to 5 private limited companies.
* Original owner **A** did **not** charge service tax.
* Query: Does **X-LLP** need to charge service tax on the sub-letting rent it collects?

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### Relevant Points on Service Tax and Renting of Immovable Property:

1. **Renting of Immovable Property is a taxable service under Service Tax law** if:

* It is commercial property (which office premises usually are).
* The **aggregate rent received/receivable exceeds ₹10 lakh per year** (threshold limit for service tax registration and payment).

2. **Who is liable to pay service tax?**

* The entity receiving the rent (service provider) is liable.
* So, **A** (the original owner) should ideally pay service tax if rent exceeds the threshold.
* **X-LLP** sub-letting the premises also becomes a service provider to the 5 Pvt Ltd companies.

3. **Sub-letting is a separate taxable service:**

* When **X-LLP** divides the premises and charges rent to others, it is **rendering a fresh taxable service**.
* So, **X-LLP must charge service tax on the rent amount collected from these 5 companies if the rent exceeds threshold**.

4. **If original owner A did not charge service tax:**

* That does **not exempt X-LLP** from charging service tax on its sub-letting rent.
* Both can be independently liable.

5. **If X-LLP is already registered and paying service tax on other services:**

* This renting/sub-letting income will be **added to its aggregate taxable turnover**.
* If the total rent from sub-letting (plus other taxable services) exceeds ₹10 lakh, service tax must be charged on the rent portion.
* It’s possible to pay service tax under the same registration.

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### Summary:

| Party | Service Tax Liability on Rent/ Sub-letting? |
| ------------------- | -------------------------------------------------------------------------------------------------------------- |
| Original Owner A | Yes, if rent received exceeds ₹10 lakh/year |
| X-LLP (Sub-Letting) | Yes, liable to pay service tax on rent collected from Pvt Ltds, if aggregate taxable turnover exceeds ₹10 lakh |

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### Practical Advice:

* **X-LLP should treat sub-letting as a taxable service and charge service tax** if the rent portion exceeds the threshold.
* Service tax should be **shown separately on invoices/bills issued to the Pvt Ltd companies**.
* If A did not charge service tax, A may be liable to pay it on the rent received.
* X-LLP should ensure compliance to avoid penalties or notices from tax authorities.

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If you want, I can help you draft a sample invoice format including service tax for X-LLP or provide further clarifications. Would you like that?

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