K P BHANUSHALI (PROPRIETOR) (512 Points)
06 November 2012I am hiring a Shop for Readymade Garments business from Nov 2012 onward for 36 months. Rent agreement for this purpose has been duly registered.
Monthly rent for this Shop will be Rs.39000/-. This rent figure is to be paid half-half (19500 & 19500) by cheque to Mother & Son separately.
Owners (Mother & Son) of the shop says that I have to pay service tax also.
Whether they are justified or not?
T & R
@VaibhavJ
(Believe!! Live your dreams!)
(33516 Points)
Replied 06 November 2012
Hi
If total rent to be charged in financial year exceeds Rs. 10 lacs then you have to charge Service Tax else not required.
Sinnce in your case its not going to increase Rs.10 lacs no serv Tax to be charged.
Dilip Bandekar
(Service)
(85 Points)
Replied 06 November 2012
Hi
Moreover, as per the recent judgment of Tribunal, if the property is held jointly by the Owners, the limit of Rs.10 lacs will be applicable to each owner. For e.g. in your case, if you are paying 39,000/- to be divided equally in Mother & Son then, it will be treated as both of them are providing the Services and the limit of Rs.10 lacs will be applicable to both.
Suresh
(Student)
(43 Points)
Replied 06 November 2012
Yes. You have to pay Service Tax over and above your normal rent of Rs.19,500/-
Only thing need to get confirmed from your owners that whether they both have service tax registration or not.
Prasad
(Sr. Manager)
(617 Points)
Replied 06 November 2012
if the owners are service tax assessee then you will need to pay service tax, ensure you collect the registration certificates copies for your records and pay service tax only if they are registered
Ravindra Mittal
(Individual)
(39 Points)
Replied 07 November 2012
Service tax is applicable when:
1. The person collecting the service tax should have collection from property rent of Rs 10 lakhs or more per annum. In your case the rent paid by you is Rs 19,500 p.m. i.e. Rs.2,34,000 per annum to a particular individual.Now. let us understand this in another way. Suppose you were paying property rents to different individuals , amounting to Rs 10 lakhs or more( for example, Rs.2,34,000 to five or more individuals). Even then, you were not required to pay service tax to each one of them, until unless anyone from the said five individuals was having a collection of Rs 10 lakhs or more annually.
2. Needless to mention that the person paying service tax need not be registered with the competent authorities. Of course, the one who is collecting the service tax has to be registered to deposit the same in the concerning "head".
I hope this helps you.
Ravindra
CAclubindia
