Hello
*** I have first searched through this forum and read various postings on this topic but I still had other questions that needed answers as they may have different interpretations ***
After my initial research, I have a few questions about Service Tax on Rent.
If I have one property in North Mumbai and one property in Mid-Mumbai and I have rented them both out on a long term “Lease” to different tenants for their commercial business offices. While the combined lease rent of both properties was less, with lease renewals in this Financial Year (F.Y. 2011-2012), the new combined lease rent is greater than 10 Lakhs per annum.
Questions:
(1) What is the limit of Rent after which Service Tax is applicable?
Service Tax website says Rs.9 Lakhs –
https://www.servicetax.gov.in/faq-29sept11.pdf - Section 2.1 on Registration
“Every person who has provided a taxable service of value exceeding Rs. 9 lakhs, in the preceding financial year, is required to register with the Central Excise or Service Tax office having jurisdiction over the premises or office of such service provider.”
But I have also read Rs.10 Lakhs somewhere –
https://www.servicetax.gov.in/faq-29sept11.pdf - Section 8.1(ii)(h)
Is 9 Lakhs a generic limit for all kinds of 100+ services on which the Government levies Service Tax and is there a specific limit for Rent?
(2) Is the amount of Rent Limit to be calculated individually for each property or to be combined to see if the Limit of Rs.9 Lakhs is crossed?
(3) When should I apply for Service Tax registration number? I didn’t know at the start of the F.Y. 2011-2012 that Rent will go beyond the Limit of 9 Lakhs. If I apply now for the Service Tax number then will I have to pay Service Tax on Rent for the full year F.Y.2011-2012 or only start collecting S.T. from the month after I get S.T. Registration Number?
(4) What do I do if the Lessee is not willing to pay for the past months? I don’t want to pay S.T. first to Government and then try to recover from Lessee as they will only harass and not pay.
(5) With the new lease agreements, both the Lessees have agreed to pay the Service Tax. Since I know that the Rent is likely to go beyond 9 Lakhs limit in the next F.Y. 2012-2013, is it okay if I apply for Service Tax registration number in April 2012 and then start collecting S.T. from both Lessees and paying it to the Government from May 2012?
(6) Does anyone have any experience with Service Tax registration for Rent? Is there any major trouble that Service Tax authorities create for individuals like “Why did you not register before?” or do they go on a witch hunt and raise Service Tax demands on past rent and force penalty and interest on individuals / Senior Citizens?
I will appreciate your answers / guidance. Thanks in advance for your time!
CAclubindia
