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Rent collecting from retired employees

ravi charan (Taxation excutive) (121 Points)

08 March 2013

Sir/madam

We are mfg comany and we are providing accomidation facility to our employes. we are not collecting any amount and we are not paying the HRA also ?

My Queries

1. We are giving 90 days free accomidation to retaired employes for vacating ?

2. If not vacat with in 90 days due to personal resons we are collecting the 3000/- in the name of maitanance charges from retired employee.

the above two situations we are not paying service tax to govt. is it right or not ?

Give valuble answers with reference.

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8 Replies

Vikas (CA) (1135 Points)
Replied 09 March 2013

Dear Ravi,

The services by way of renting of an immovable property for the residential dwelling is covered under the Negative list and hence the same shall not be subjected to Service Tax.

For your ready reference, you may note -

as per Sec.66D(m) of the Finance Act, 1961, "Services by way of renting of residential dwelling for use as residence".

Hence, the same shall not be taxed under Service Tax Law, in my view.

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TKKKKKK (PRACTICING CA) (3268 Points)
Replied 10 March 2013

rent is not covered under service tax regime as it is residential dwelling .

Prasad (Sr. Manager) (617 Points)
Replied 11 March 2013

Agree that rent is covered under the negative list and not taxable. However you are collecting the amount as Mantainace charges, in my opinion ST is applicable.

Since your prinicpal activity is Mfg, you may not have big serivces income hence , Please look at the services amount of basic exemption of 10L PA, before deciding whether you need to collect ST from your retired employees.