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Service tax on rent

(Guest)

In case of a landlord , not providing any other service , whether rent upto 8 lac will be exempted from service tax in the first year starting from 1-06-07 . Particularly when his taxable service in the last year was nil .

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9 Replies

(Guest)

please send any valuble suggestions relating to our feild to my id bye nareshk

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(Guest)

whether service tax is applicable to the owner if he lease out the property and annual return is more than 8,00,000/- (Eight Lacs.) and what deductions are available while calculating the amount of service tax

SRINATHA (EMPLOYEE) (90 Points)
Replied 27 August 2007

Hi, Service charges received which is below 8 lacs is not liable to service tax.

V Ram (21 Points)
Replied 29 August 2007

Your answer is in your question itself i feel hes not liable

(Guest)

Hello I'm new member

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suresh (Manager- indirect tax) (45 Points)
Replied 07 September 2007

There are two different views in this issue. The first view is that since the service tax on commercial rental itself is a new levy the landlord is exempted from payment of service tax upto Rs. 8 lakhs. The other view is that if the rental income exceeds Rs.8 lakhs in the proceeding financial year, then the landlord has to pay rent without claiming any exemption. As per the service tax rules, in order to claim exemption of Rs. 8 lacs, thevalue of taxable service should not have exceeded Rs. 8 lacs in the proceeding year. Going by this Rule the latter view seems to be more appropriate. However, this issue needs to be clarified by the finance ministry.

Harish (Chartered Accountant) (57 Points)
Replied 07 September 2007

Yes, If the aggregate value of taxable services ( including the service which are exempt from tax under any notification) provided by a service provider during the financial year 2006-07 does not exceed Rs.8 Lakhs, the service provider has the option to avail threshold exemption upto Rs.8 Lakhs during the financial year 2007-08.

Harish (Chartered Accountant) (57 Points)
Replied 07 September 2007

If his annual return exceeds Rs. 8,00,000 then the service provider is liable to pay the tax. it does not matter wether it is from leasing of such property For ex: if a person leases a property for Rs. 25,00,000 for 3 years the return should be calculated as 25 lacs/3years which comes to 8,33,333 which exceeds the limit of Rs. 8,00,000 and hence he is liable to pay the tax

Pavithra (student) (44 Points)
Replied 07 September 2007

The threshold limit is Rs. 8 lacs( 2007-08).Rental receipts upto the threshold limit in a year is not subject to Service tax. Annual rents exceeding Rs. 8 lacs tax will be subject to service tax. Any property tax paid to the municipal authorities will be deducted and such an amount will be the assessable value for computing the Rs.8 lacs.