Is Service Tax applicable for guesthouse with food facility?

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Vinod (Querist)
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30 December 2007 Would like to know whether Service Tax or and any other formalities are needed for operating a guest house with food facility.

It will have only 4 to 5 bedrooms fully furnished independent house on rent.

pls clarify.

annapurna

annapurna (Expert)
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08 January 2008 When your company is operating a guest house with food facility, it has to be analysed that whether it is used for commercial purpose or residential purpose. In case your company is receiving the rent on immovable property which is used for commercial purpose then your company is liable to collect the service tax at the rate of 12.36% provided it exceeds Rs. eight lakhs for the year 2007-2008

Vinod

Vinod (Querist)
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10 January 2008 Thanks, Would like to have the following clarification also.
- whether this service tax 12.36% is applicable even if the guest house has less than 5 bedrooms? Pls explain.
- It is used for commercial purpose (similar to service apts) only.

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annapurna

annapurna (Expert)
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16 January 2008 Even the guest house has less than five bedrooms, still you are liable to pay the service tax. There is no such limit for guest house except for construction of residential complex where the limit is below 12.