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Service tax query on lease rent

808 views 1 replies

CA.B.Sivakumar

162 Points Posted on 21 February 2014

Present scenario.

Company A (Government company) has leased out bulding to Company B on a rent of RS. 100000/- (no Service Tax is charged by Co. A. Company B in turn sublease the property entirely to Company X on a rent of Rs. 100000/- ( No Service tax is charged by Co. B till now.)

Question.

1. Is service tax is applicable on this transaction? If yes, can Company X can avail Cenvat credit on the service tax paid on lease rent?

2.What is the % of service tax? Any abatement is there on lease rent? Expecting the reply at the earliest

Replies (1)

CA Shraddha Vora

Teamhead

149 Points Posted on 22 February 2014

Yes service tax is applicable on the same at 12.36% and CENVAT Credit is available. Further Government Company does not constitute Government. Even if it did constitute Government, business support service in the nature of renting of immovable property is not exempt from service tax. No reverse charge also applicable on the transaction. Renting is a declared service hence even a cost apportionment of renting is liable to service tax.