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Liability of Service Tax payment on Rent received without added up Service Tax

Kamlesh Pandya (Chartered Accountant) (51 Points)

01 September 2007

pl. let me know landloard had given to his tenant an intimation in writing to pay rent by adding up service tax. Even after receiving such intimation, tenant given only rent amount as per without added up service tax portion, while as per rent/lease agreement stated that all the taxes like municipal & others are born by tanent only, so in that situation Landloard is unable to received/collect service tax amount. In this situation what type of remedy available for paying service tax to the landlord without effecting his interest in rent received amount.

Pl. reply.

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6 Replies

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 02 September 2007

Service tax is like sales tax . Sales tax is on goods and service tax is on services . Now if you agree to sale goods at a price , wihout agreeing that sales tax will be extra , can you charge sales tax extra. It is a matter of agreement between the parties , whether price quoted will include tax extra . So your agreement with the tenant will decide the issue.

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CA vikash sureka (chartered accountant) (129 Points)
Replied 03 September 2007

the landlord will be charged with serv ice tax as if the amount of service tax is included in the rent.

suresh (Manager- indirect tax) (45 Points)
Replied 04 September 2007

No. of landowners are facing similar problems. At the time of entring the rental agreement, the land lords might not have made any provision for inclusion of the service tax in the rent. So they cannot demand the payment of service tax from the tenant. However, the landlord can offset the non payment by increasing the rentals at the time of extension of the agreement.

(Guest)

Service tax not reliesed from tenant does not free land lord from payment of service tax. Land lord has to pay service tax to the aouthority asper provision

(Guest)

Most of the rent agreements contain a clause that lessor/ landlord is to pay all taxes , but in most cases it is written " local taxes" Municipal taxes" etc. There the landlord can enforce the agreement to his benefit. Otherwise he will have to gross up the service tax incuded in rent.

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(Guest)

Please pl. let me know landloard had given to his tenant an intimation in writing to pay rent by adding up service tax. Even after receiving such intimation, tenant given only rent amount as per without added up service tax portion, while as per rent/lease agreement stated that all the taxes like municipal & others are born by tanent only, so in that situation Landloard is unable to received/collect service tax amount. In this situation what type of remedy available for paying service tax to the landlord without effecting his interest in rent received amount.