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Service Tax on Commercial Rent

Ashish Goyal (Audit - Senior Exec) (27 Points)

05 March 2010  


Urgent clarification on the applicability of service tax on commercial rent. Kindly request you to help.

-Mr.A (as an individual) the lessor of an immovable property, lets out the property for commercial purpose. Should he charge service tax on the rent receivable?

-Would it make a difference if the lessor is A Pvt Ltd (and not an individual)?

-Is there any limit above which only ST is to be charged?

 4 Replies

Max Payne (employed) (2569 Points)
Replied 05 March 2010

Yes Sir,

ST has to be levied...


New budget has overruled the decision taken by Delhi HC in Home Solution Retail India and Ors Vs UOI (2009), and renting of immoveble property istelf constituts a taxable service..

Applicable with retrospective effect from 01.04.2007.

1 Like

Chintan Vasa (CA Final Student M.Com)   (1241 Points)
Replied 05 March 2010

The basic exemption limit available is Rs. 10,00,000/- Thereafter an assessee would have to pay service tax. It doesnt make any difference whether the assessee is an individual or company.


The basic exemption limit if Rs.10,00,000/-  is available for every one (including individuals) on which no service tax is payable.   This limit includes all services provided, not only renting.   So if you provide any other service, the amount received from such service should also be accounted and service tax is payable if it exceeds Rs.10 lakhs.

chidambar (Student) (23 Points)
Replied 16 August 2011

hello dear all, " Service tax on renting of Immovable Property Circular issued by Central Board of Excise and customs ("CBEC") for collection of service tax arrears.

CBEC has, vide circular F.No.276/282/2010-CX.8A dated Feburary 24, 2011, instructed its field officers to take necessary steps for collection of pending servicetax on account of renting of immovable property services. It may be recalled that the Supreme Court had on January 10, 2011 passed an interim order staying the Delhi High Court interim order (dated May 18th,2010) which granted stay to the levy of service tax on renting of immovable property services. The Supreme Court has on Febuary 4 2011 remanded teh matter back to the Delhi High Court for speedy disposal of all writ petitions filed on this matter, and has ordered that its interim order of January 10, 2011 would continue to operate till the disposal of the writ petitions in the High Court.

     Relying on the above interim order of the Supreme Court, the circular states that the interim order, dated May 18,2010 passed by the Delhi High Court (post amendments), staying the levy of service tax on renting of immovable property has been nullified. it is also clarified that puruant to the Order of Supreme Court, theUnion of India is now legally empowered to collect service tax on commercial properties until the final  decision of the Delhi High Court is passed. 

      Accordingly, the field officers are instructed to take necessary action for filling of application for vacation of interim directions issued in favour of petioners by various High courts.

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