I HAVE EARNED RENTAL INCOME BY RENTING OF SHOP e.i Rs. 864000 IN PREVIOUS YEAR 2007-08. WILL I HAVE TO PAY SERVICE TAX. IF YES AT WHAT RATE?
PAWAN PATIDAR (STUDENT) (69 Points)
03 September 2008I HAVE EARNED RENTAL INCOME BY RENTING OF SHOP e.i Rs. 864000 IN PREVIOUS YEAR 2007-08. WILL I HAVE TO PAY SERVICE TAX. IF YES AT WHAT RATE?
CA. C V SURYAM
(Practising Chartered Accountant)
(865 Points)
Replied 05 September 2008
You are above the basic exemption limit with rental income. You are liable to pay service tax @ 12.36% on gross rent realised minus proportionate property tax paid.
| Originally posted by :C V SURYAM | ||
| " |
Ours is company and taken a opern land (there is no construction on land any room or shed) from a Firm on lease basis for Rs.50000/- per month - I request you kindly clarify whether Service Tax is applicable in this case or not. please expedite Regards P.Visweswaraiah
|
" |
As per the present legal provisions the Landlord if he receives more than Rs. 8,00,000 in aggregate during an year for the services rendred by him he needs to pay Service Tax.
Here renting of immovable property for business or commerce is also included in Taxaxble Services. For such renting he earns Rs 6,00,000 during the year. In addition if he earns other amounts for other taxable services so that the total exeeds Rs. 8,00,000 then he needs to pay Service Tax.
For your refernce:
A)
The Act defines the relevant taxable service as follows:
"renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include -
(i) renting of immovable property by a religious body or to a religious body; or
(ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre;
Explanation 1.- For the purposes of this clause, "for use in the course or furtherance of business or commerce" includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings;]*
Explanation 2.- For the removal of doubts, it is hereby declared that for the purposes of this clause "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property;
B)
A booklet on Frequently Asked Questions on Service Tax. published by the Directorate General of Service Tax explains as follows:
7.1. What are the exemptions available for small service providers?
Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding eight lakh rupees in any financial year. . . . . . . . . . . . etc
7.3. What are the conditions for availment of the exemption from Service Tax by the small scale service providers?
Some of the important conditions for availment of the exemption are as follows:
· If the aggregate value of taxable services rendered by the service provider from one or more premises exceeds rupees eight lakhs in the preceding financial year, the service provider is not eligible for the exemption for the current year.
· The exemption shall apply to the aggregate value of all taxable services and from all premises and not separately for each premise or each service.
........... etc
It is relevant to mention here that there are cases before the Court about the validity of treating Rent as Service Income.
AreKae
https://arekae.wordpress.com
For the Financial Year 2008-09
The annual threshold limit of service tax exemption for small service providers has been increased from the present level of Rs.8 lakh to Rs.10 lakh with effect from 01.04.2008, provided that the aggregate value of taxable services rendered by such provider of taxable service from one or more premises, does not exceed Rs.10 lakh in the preceding financial year.
[refer notification No. 8/2008-Service Tax, dated 01.03.2008]
I have taken a premises in delhi and paying a rent of 25000pm.. my landlord is asking me to pay the service tax @ 12.36% on that amount. i want know do i fall in this category to pay the service tax as the landlord's rent income comes in this category. its almost since 10 months back i have taken on rent.
OFFICESELVA
(Service)
(515 Points)
Replied 06 October 2008
Are you doing any business activity in the premises?
| Originally posted by :PAWAN PATIDAR | ||
| " | August Month rent received in 10th september & realised on 14th september, what is due date for payment of service tax on renting a immovable property? | " |
Dinesh Agrawal
(CA Practice )
(15 Points)
Replied 13 September 2009
please let me know whether there is service tax on rental income , if so what is the exemption limit and on what rental income it is chargeable.
Dinesh Agrawal
(CA Practice )
(15 Points)
Replied 13 September 2009
Whether there is any amendment in the service tax rules with regard to the rent on immovable property after the decision of Delhi High court to not to charge service tax on rental income on immoveable property
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