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Service Tax on Rent

Anwar (Audit Assistant) (39 Points)

22 October 2009

Hi,

I need a clarification regarding Service Tax

Our organisation is a department under Local Self Govermnent.

We have possed a building wich was leted by a 100 % Govt Owned company and we are paying Service tax on Rent.

We have sub leted a portion of ot building to an another 100% Govt owned Company. We have issued invoice claiming the rent & service tax from the company.

But the company has denied to pay service tax by claiming that they are paying rent to Goverment[ Local Self Government department] also the building is possed not for commercial purpose.

Please advise whether we can collect tax on Sublet Property

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2 Replies

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)
Replied 23 October 2009

Dear Anwar,

There is no need to pay or collect service tax on rent of immovable property as the same has been taken out of the perview of service tax vide order of the delhi high court recently. Though the order has been chalenged by the department before the Supreme Court but it has not been finalysed. terefore till the time somethings comes out of mouth of SC. Service TAx on Immovable property not o be paid or collected.

Regards

Jeevesh Mehta

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EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 25 October 2009

IF THE VERDICT OF SUPREME COURT GOES IN FAVOUR OF SERVICE TAX AUTHORITY (STA) THEN STA WILL NOT ESCAPE THE OWNER OF THE BUILDING IN ANY EXCUSE.

SO IT IS BETTER ADVICE, TO COLLECT THE SERVICE TAX OR MAKE AN AFFIDAVID BY THE TENANT THAT HE WILL PAY PENDING SERVICE TAXS IF THE CASE GOES IN FAVOUR OF STA

THE OWNER CAN SHIFT THE CHARGE TO TENANT