Service Tax On Rent
This query is : Resolved
05 August 2010
Significant composition of the income of the company is from rent of residential properties. Whether service tax levy is applicable - if yes, with effect from what date.
What is the company has not collected any service tax from the rent payers till date - would they have to pay the service tax from out of the rent amount collected earlier or can they attempt to proceed and charge the levy of earlier year service tax NOW?
Company has also been collecting from the occupants of its premises certain expense reimbursements in the nature of occupants' contribution towards property taxes, electricity and common repairs & maintenance, etc. Will these collections also be subject to levy of service tax even if in the nature of proportionate reimbursement contribution.
What is the company has not collected any service tax from the rent payers till date - would they have to pay the service tax from out of the rent amount collected earlier or can they attempt to proceed and charge the levy of earlier year service tax NOW?
Company has also been collecting from the occupants of its premises certain expense reimbursements in the nature of occupants' contribution towards property taxes, electricity and common repairs & maintenance, etc. Will these collections also be subject to levy of service tax even if in the nature of proportionate reimbursement contribution.
05 August 2010
no service tax on residential houses... only for those premises which are used for commercial and business service tax is applicable
09 August 2010
thank you for the clarification Mr. Srinath. Would service tax be applicable on charges levied to occupants towards contribution to security charges, repairs, electricity etc.?
09 August 2010
Would appreciate a reply with relevant section / case law with respect to above.
10 August 2010
Section 65(90a) defines rent as
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;
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;
11 August 2010
Thanks again Mr. Srinath for the reference to defination. Some clarifications, if I may ask...
1. "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" ..
** Question here is - for the furtherance of who's business or commerce - the occupant's (tenant's) or the owner's?
2. "...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;
** The above exclusions appear to be very specific so as to apply only to a religious body or (non-profit?)educational
body. The exclusions are not specifically refering to renting out for the purpose of residential accomodation.
****
So back to our original question again - if a company is engaged in a primary activity (being primary source of income) of renting out residential premises, whether service tax is leviable on such activity.
Whether additional charges recovered from the occupants / tenants in respect of proportionate contribution towards secutiry, maintenance etc. would be leviable for service tax?
1. "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" ..
** Question here is - for the furtherance of who's business or commerce - the occupant's (tenant's) or the owner's?
2. "...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;
** The above exclusions appear to be very specific so as to apply only to a religious body or (non-profit?)educational
body. The exclusions are not specifically refering to renting out for the purpose of residential accomodation.
****
So back to our original question again - if a company is engaged in a primary activity (being primary source of income) of renting out residential premises, whether service tax is leviable on such activity.
Whether additional charges recovered from the occupants / tenants in respect of proportionate contribution towards secutiry, maintenance etc. would be leviable for service tax?
11 August 2010
it relates to tenat's business. since it says for use in the business. the property in ques should be used for business
since in the 1st line itself it is clearly mentioned as commercial or business der is no ques of exemption and as a consequence taxing of residential property does not arise
since in the 1st line itself it is clearly mentioned as commercial or business der is no ques of exemption and as a consequence taxing of residential property does not arise
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