Is service tax liable to be paid by landlord on rent not realised ?Landlord is a charitable society.Immovable property let out for commercial purposes.Gross annual rent is about Rs.1 crore.Some tenants are not paying rent.
GEORGE JOSEPH ( Practising CA) (100 Points)
20 June 2015Is service tax liable to be paid by landlord on rent not realised ?Landlord is a charitable society.Immovable property let out for commercial purposes.Gross annual rent is about Rs.1 crore.Some tenants are not paying rent.
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(176 Points)
Replied 21 June 2015
Dear George,
As per the rules of Point of taxation, the liability for payment of service tax arises as soon as the service is provided for a consideration. The receipt of consideration is not a factor for taxability of service.
In your case the assesse had provided the service (rent) for a consideration (rental income). Though the rent is not paid by the tenant, the landlord is supposed to pay service tax on the rental income.
P.S: Prior to 2012 the assesse is not required to pay service tax on unrealised rental income.
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