My mother has a building (100 sq yard house, 900 sq feet total) which has 4 floors:
1. Ground Floor ( Front 750 sq feet let out for commercial purpose to a company. Rent : 80K per month
2. First and Second floors occupied by my mother and her two sons along with their families
3. Third Floor: Rented out for residential purpose. Rent 22K per month.
4. For ground floor rear 150 sq feet ( a small room) is planned to be let out to bachelor/spinchters for residential purpose.
It is clear that service tax is applicable for commercial rent exceeding 10 lakhs per annum.
Questions:
1. Will service tax be applicable on rental income from third floor (22 K), occupied for sole residential purpose by a couple ?
2. Ground floor rent would eventually increase every year and annual income would exceed 10 lakhs per annum. After that, will rent received on other residential floors (third floor) be applicable for service tax?
3. Once rear side of ground floor, which is a room with attached bath and totally locked from front office, is rented out for residential use, rent received by the portion of ground floor would be applicable for service tax?
CAclubindia
