Service tax on rent paid to director by the company.

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Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2012 A company is paying office rent to its one of the director. Whethter service tax is leviable on this?and if Yes who is supposed to pay service tax company or the director?

Viral Vora

Viral Vora (Expert)
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22 November 2012 If the amount of rent exceeds 10.00 L then service tax is applicable on Director.

Director is not providing any service to company by renting own immovable property. Hence company is not required to pay service tax.

Ajay Mishra

Ajay Mishra (Expert)
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22 November 2012 Agree with expert.

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Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2012 My further question iare:-
a) whether only professional services by directors are liable for service tax?
b)In case of rent kind of services whether letting down of own property is not permissible?
Plz share your views...

Viral Vora

Viral Vora (Expert)
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22 November 2012 As per notification no. 30/2012 dt 20.06.2012 only those services which are provided by directors of the company as a service to the company will attract service tax.

I do not understand your second question. Plz elaborate

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2012 Mr. vipul i am asking whether all services by directors or only professional services by directors are liable for service tax?
b) My 2nd ques. is whether if i give on rent my own house then whether it is not a service as you have said director has not provided any service by providing own house on rent?

Viral Vora

Viral Vora (Expert)
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22 November 2012 Only professional services by directors are liable for service tax.

By renting a house to company, director is not providing any professional service. Hence not subject to service tax.

But check clauses of renting of immovable property under declared service to ascertain whether service tax is payable by director.

Company is not required to pay service tax.

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2012 Can you please provide any notification or circular in support that only professional services by directors are taxable?

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Viral Vora

Viral Vora (Expert)
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22 November 2012 Notification No.45/2012 dt 07.08.2012 states that services provided by the part time / independent / expert /nominee director ( who are not the employees of the comapny )are in the nature of professional services.Hence chargeable under reverse charge mechanism

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2012 Thanks Mr.Viral but in notification 45/2012 exact phrases given by you....'service provided by.......are in nature of' is not there,

Pradeep Nainawati

Pradeep Nainawati (Expert)
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27 November 2012 To my view, While calculating the threshold limit of 10 lakhs for director, amount received by director in capacity of director from company shall also be included.

As rightly said by Mr. Viral the company is liable to pat ST on RCM only on those services which are provided by the director in the capacity of director. When your company pays rent to director, he receives it in the capacity of Owner of property not for being the director of company. On this service director will be liable to pay ST subject to fulfillment of other required conditions.