Service tax on house rent

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N K S

Others

56 Points Posted on 13 September 2016

Hi, I want a clause in my rental agreement to the effect that the owner doesnt have a problem in me carrying out any business activity in the premises. The owner doesnt have a problem with this but his legal team has advised that just having this clause will attract service tax on the house rent , even if the actuall business is not carried out at all, and that this will continue forever even after i vacate and somebody else moves in with no such clause. Please advise me on the exact position in such cases. Thanks a lot for your help.

Replies (3)

CA Harshal Totla

Chartered Accountant

1575 Points Posted on 13 September 2016

Renting of residential dwelling to be used as residence is covered under the negative list of services hence no service tax on such service. However, in case of artificial bundling where a residential dwelling is used for both residential and commercial purpose, service tax is applicable on full amount of rent on both residential component and commercial use component.

Biswaranjan Patra

Article Assistant

33 Points Posted on 17 September 2016

dnt keep such a clause in your agreement..else you would be paying service tax on entire amount...
is possible go for 2 different aggrement for different portion of the premise..if seems practical based on the infrastructure..then you will be paying service tax only for the part your took for business purpose.