Service tax on rental property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2011 I have leased my shop to my son one year ago at Rs 30000.00 per month. He is now leasing the same property to third concern for Rs 90000.00 per month and has asked for my consent. He has also agreed to increase my rent to Rs 65000.00 The shop is registered in my name, he is asking to make an agreement whereby the lease holder shall pay me 65000.00 per month and Rs 25000 to him. The question is shall i be liable to pay service tax as the total rent for the shop shall be Rs 1080000. but I shall receive ony 780000.00 from it. Please advice

Kaur

NILESHKUMAR

NILESHKUMAR (Expert)
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20 December 2011
pleas let me know shop is being leasd singly or with other ameneties such as electricity , water , furnitures, fixtures etc.

make an agrement in such a way that is shows shop rent and other income received from amenites seperately.

Show rental income received from amenties as Rs. 60,000/- and rental incoem from shop Rs. 30,000 per month. issue seperate BHADA CHITTI for the same. Enter agreement showing both this heads sepearelty.

There will be no tax on rent of ameneties and shop rent will not cross exemption limited of ten lacs , so no tax liability , sav tax and enjooooooooooy !

Shop being a single property can not leased to two different person at the same time. This may me treated as an arrangement to cut down the rental income below limit of Rs. 10 lacs p.a.

Hope this is clear to you.

THANKS
NILESHKUMAR
B.COM, LLM, MBA(FIN), CWA.
CONSULTANS AND ADVOCATES
CENTRAL EXCISE, CUSTOMS, SERVICE TAX AND FORIGN TRADE POLICY, EXIM

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