Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Service Tax

Queries 1131 views 2 replies

Ashwani

Chartered Accountant

56 Points Posted on 03 July 2008

Renting of immovable property is taxable service under secvice tax Act. But when a person transfer a property to another person and legal formalities is still pending. In that situation the rent received from the tanent is taxable in the hand of the seller of buyer. Another question is that the tanent is not paid rent to the buyer because he is not the registered owner of that property. He pays the rent to the seller and seller further transfer the above rent to the buyer. In that situation what is the treatment of service tax act.

Replies (2)

Sambu Suresh

CA Job

564 Points Posted on 03 July 2008

1)see at the time of payment of the rent , seller is the owner of the property. so seller has to collect the service tax and pay to the goverment.

2) Buyer will receive the amount from the seller because, he is eligilble for that amount.

3) The relation ship between the buyer and the seller is not that of the landlord and the tenant. it is only a buyer and seller.

4) up to the time of registration seller is the legal owner. and as it was delayed due to some reasons , seller would pay the money to the buyer in the form of rent.

5) so this is totlly a different contact. so as per the existing law no service tax implicaitons will arise between the seller and the buyer.