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 ?
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 ?
20 May 2014
According to Me ST should b charged on that amount. Well wait for other experts reply.
20 May 2014
Yaa, I agree with Sandeep Dharar. If the total bill exceeds threshold limit it should be chargeable to service tax.
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?
but x-llp is already in service sector and pay service tax on other service provided by it. then?
24 July 2025
Here’s a clear breakdown of the service tax implications on sub-letting rent in your scenario:
---
### 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?
---
### 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.
---
### 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 |
---
### 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.
---
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?
---
### 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?
---
### 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.
---
### 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 |
---
### 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.
---
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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