SERVICE TAX ON RENTAL INCOME

You are above the basic exemption limit with rental income.  You are liable to pay service tax @ 12.36% on gross rent realised minus proportionate property tax paid.

As per the present legal provisions the Landlord if he receives more than Rs. 8,00,000 in aggregate during an year for the services rendred by him he needs to pay Service Tax.

Here renting of immovable property for business or commerce is also included in Taxaxble Services. For such renting he earns Rs 6,00,000 during the year. In addition if he earns other amounts for other taxable services so that the total exeeds Rs. 8,00,000 then he needs to pay Service Tax.

For your refernce:

A)

The Act defines the relevant taxable service as follows:

"renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of  business or commerce but does not include -

(i) renting of immovable property by a religious body or to a religious body; or

(ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre;

Explanation 1.- For the purposes of this clause, "for use in the course or furtherance of business or commerce" includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings;]*

Explanation 2.- For the removal of doubts, it is hereby declared that for the purposes of this clause "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property;

B)
A booklet on Frequently Asked Questions on Service Tax. published by the Directorate General of Service Tax explains as follows:

7.1.  What are  the exemptions available for small service providers?

Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding  eight lakh rupees in any financial year. . . . . . . . . . . . etc 

7.3.  What  are  the  conditions  for  availment  of  the  exemption from  Service  Tax  by  the  small scale service providers? 

Some of the important  conditions for availment  of the exemption are as follows: 

·  If the aggregate value of taxable services rendered by the service provider from one or more premises exceeds rupees  eight   lakhs in the preceding financial year, the service provider is not eligible for the exemption for the current year. 

·  The exemption shall apply to the aggregate value of all   taxable services and from all premises and not separately for each  premise or each service. 

........... etc

It is relevant to mention here that there are cases before the Court about the validity of treating Rent as Service Income.


AreKae
https://arekae.wordpress.com

For the Financial Year 2008-09

The annual threshold limit of service tax exemption for small service providers has been increased from the present level of Rs.8 lakh to Rs.10 lakh with effect from 01.04.2008, provided that the aggregate value of taxable services  rendered by such provider of taxable service from one or more premises, does not exceed Rs.10 lakh in the preceding financial year.
[refer notification No. 8/2008-Service Tax, dated 01.03.2008]

I have taken a premises in delhi and paying a rent of 25000pm.. my landlord is asking me to pay the service tax @ 12.36% on that amount. i want know do i fall in this category to pay the service tax as the landlord's rent income comes in this category. its almost since 10 months back i have taken on rent.

Are you doing any business activity in the premises?

Dear Sir/Madam,

Actually we are three persons ,We are running a commercial property.Our total rental income is more than 10 Lakhs Pa,but individually below 10 Lakhs. Can we take the service tax registration? Please give the correct guidelines to us .

Thanking You

With Regards

SAIJU

please let me know whether there is service tax on rental income , if so what is the exemption limit and on what rental income it is chargeable.

Whether there is any amendment in the service tax rules with regard to the rent on immovable property after the decision of Delhi High court to not to charge service tax on rental income on immoveable property