Property rent limit for serv.tax

I am hiring a Shop for Readymade Garments business from Nov 2012 onward for 36 months. Rent agreement for this purpose has been duly registered.

Monthly rent for this Shop will be Rs.39000/-. This rent figure is to be paid half-half (19500 & 19500) by cheque to Mother & Son separately.

Owners (Mother & Son) of the shop says that I have to pay service tax also.

Whether they are justified or not?

T & R

Replies (5)

Hi

If total rent to be charged in financial year exceeds Rs. 10 lacs then you have to charge Service Tax else not required.

Sinnce in your case its not going to increase Rs.10 lacs no serv Tax to be charged.

 

Thanks//Vaibhav
Click thank button to convey your appreciation. 
 

Hi

Moreover, as per the recent judgment of Tribunal, if the property is held jointly by the Owners, the limit of Rs.10 lacs will be applicable to each owner. For e.g. in your case, if you are paying 39,000/- to be divided equally in Mother & Son then, it will be treated as both of them are providing the Services and the limit of Rs.10 lacs will be applicable to both.

Yes. You have to pay Service Tax over and above your normal rent of Rs.19,500/-

Only thing need to get confirmed from your owners that whether they both have service tax registration or not.

 

if the owners are service tax assessee then you will need to pay service tax, ensure you collect the registration certificates copies for your records and pay service tax only if they are registered

Service tax is applicable when:

1. The person collecting the service tax should have collection from property rent of Rs 10 lakhs or more per annum. In your case the rent paid by you is Rs 19,500 p.m. i.e. Rs.2,34,000 per annum to a particular individual.Now. let us understand this in another way. Suppose you were paying property rents to different individuals , amounting to Rs 10 lakhs or more( for example, Rs.2,34,000 to five or more individuals). Even then, you were not required to pay service tax to each one of them, until unless anyone from the said five individuals was having a collection of Rs 10 lakhs or more annually.

2. Needless to mention that the person paying service tax need not be registered with the competent authorities. Of course, the one who is collecting the service tax has to be registered to deposit the same in the concerning "head".

I hope this helps you.

Ravindra

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
19 October 2026
Accountant

Jari Saree Center

New Delhi

Others

View Details
Company
ARTICLESHIP 25 October 2026
Article Intern (CA Articleship)

Arpan Bohra & Co

Hyderabad

CA Inter

View Details
Company
30 September 2026
Senior Accountant

Codeboard Technology

Chennai

B.Com

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details
Company
ARTICLESHIP 01 October 2026
Articled Assistant

KPSN & Associates LLP

Chennai

CA Inter

View Details
Company
15 October 2026
Senior Accountant

Continental Belting Pvt Ltd

Mumbai

B.Com

View Details
Company
ARTICLESHIP 23 October 2026
Articled Trainee

J Y & CO

Hyderabad

CA Inter

View Details
Company
ARTICLESHIP 20 October 2026
CA ARTICLE

AMKN & CO

Noida

CA Inter

View Details