Leave & licence agreement & service tax clause

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 April 2012 WHEN THE PRIVATE ltd co has to pay service tax liability?

when leave & licence agreement is drafted ,how the licenee has to secure that liability of service tax will be on company?

what clause or words to be mentioned in the agreement?

please guild me

Pratik Pankaj Shah

Pratik Pankaj Shah (Expert)
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29 April 2012 Hi,

The activity of renting is a taxable in service tax under the heading of Renting of immovable property.

But, there are certain exclusions from immovable property like "building used solely for residential purposes and building used for the purposes for accommodation.

Therefore, as per my view you should include the following clause in your leave and licence agreement.

"The scheduled premises(as mentioned in the ___ schedule) shall be used solely for residential purpose of the lessee and the same property shall not be used for the purposes of furtherance of business or commerce"

Hope this ans would satisfy your query

Querist : Anonymous

Querist : Anonymous (Querist)

29 April 2012 if unit is taken for office cum godown purpose ,what clause to be mentioned in the agreement?

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Pratik Pankaj Shah

Pratik Pankaj Shah (Expert)
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29 April 2012 In case the premises is hired for fully for commercial purpose, then this transaction would attract service tax fully.

Bcz as per expl given by the act covers every type of arrangement which are related with furtherance of business or commerce.

So, any type of contract entered for using any immovable property (sub to certain exclusions) would attract service tax.

Querist : Anonymous

Querist : Anonymous (Querist)

29 April 2012 but here 10 lacs limit for the applicability of service tax is applicable?

Pratik Pankaj Shah

Pratik Pankaj Shah (Expert)
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08 May 2012 No 10 lakhs limits would be applicable when service tax is paid under Reverse charge mechanism (RCM).

But in the given case, service tax is paid normally.

Limit is applicable.