Service tax dilemma

If the annual rent is less than Rs.10 lakhs, there is necessity to collect and pay the Service TAx. However, TDS has to collect and pay. 

Dear Karam,

If the Shop/Mall owner is a service tax assessee (having gross receipts of Rs 10.0 Lacs or more from rent/maintenance charges in a year) then he will definately have to pay service tax on rental income, and that service tax he shall collect from the tenant by charging on the basic rent. So, ur friend has to pay service tax in addition to the rent. i.e. (300000+Service Tax)

And regarding TDS, if the annual rent paid or likely to be paid by you exceeds Rs. 180000/- p.a., then the tenant is required to deduct tax @ 10% of BASIC monthly rent (i.e. do not count Service Tax for this purpose) & deposit the same to the credit of central govt.. In your case as the rent is Rs. 300000/- p.a. ur frnd should deduct tax @ 10% of 300000/-.

I think now its clear to u.

I agree with abhishek varma wrt service tax.  But as far as TDS is concerned, i think, TDS is not applicable to Rent.  IT Notification is available in the department site. Pls check.

Agree with Abhishek,

Service tax will be charges in Invoice = Rent amount + service tax

While your friend has to deduct tax on 300,000 rent amount only u/s 194 I  as it exceed 180000 limit.

On the issue of TDS, i would like to bring some more fatcs to focus::

1. If the assessee is an Individual/HUF, then TDS to be deducted only if the gross turnover/sales/receipts of such individual/huf exceeds the limit specified u/s 44AB which is Rs.60 lakhs for the F.Y. 2010-11 and onwards. In any other assessee's case it is compulsory to deduct.

Subject to the following::

2. Rent payable during the year exceeds Rs. 180000/-

Correct me if i am wrong..

Abhishek agree with you,

but how would a deductor know the turnover/sales of the deductee, it is better to deduct in all cases where rent is above 1.8L

Exactly as said by Mr. Abhishek Sharma