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service tax on rent

shrabani dutta (CA final student) (110 Points)

25 July 2007

If a property is jointly owened by Co-owners but the rent received thereon is shown individually in the income tax files of each of the coowners then whether the service tax will be applicable to the whole of the rent of the property or on the share of each co-owner. e.g. if the total rent on a coowned property is Rs.10 Lakhs and the same is divided among 4 co-owners equally , then what will be the serervice tax implication on the above and who will be liable to pay service tax?

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4 Replies

Shyam Lal Naik (Service) (6156 Points)
Replied 25 July 2007

Certainly a seevice provider can not be held liable for service provided by any one else. Hence I feel, each of the co-owners will be liable to pay tax on the amount of rent received by them, subject however to the eligibility of the owner to exemption of Rs. 8 lac. The arrangement should be reflected in the rent agreement itself. There are litigations going on in various courts as to whether letting immovable property is service at all and is exigible to service tax. We have to wait for the final verdict.

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shrabani dutta (CA final student) (110 Points)
Replied 25 July 2007

Now as per ur reply , the co-owners given in question are not liable to pay service tax as their share donot exceed Rs. 8 lakhs, individualy. So the whole matter is exempt from service tax. Please reply.

Shyam Lal Naik (Service) (6156 Points)
Replied 25 July 2007

This limit of Rs. 8L is for receipt against all taxable services rendered by the service provider for both the current year as well as for the previous year. If the service provider does not have any other taxable receipt, the receipt is exempt.