Breaker (Manager) (31 Points)
03 March 2010From what I understand the service tax on rental income has been in litigation and last I know it was considered unconstitutional and no service tax was due on rental income.
Has a final ruling been reached on this ? Has the latest budget modified the law to make it such that service tax is due on rental income.
Any reponses with some links to the changes will be highly appreciated.
Thanks
Govind Sharan FCA
(Consultant)
(48 Points)
Replied 03 March 2010
changes has been made w.e.f 01.06.2007, so court decisions are not applicable.
govind sharan
chartered accountants
CA Pranjal Joshi
(CA)
(331 Points)
Replied 03 March 2010
Hi,
Yes, It was the decision of Hon’ble High court of Delhi dt. 18.04.2009 in the case of Home Solutions Retail India Ltd. & Others vs. UOI which struck down the levy by observing that the renting of immovable property for use in the course of furtherance of business or commerce does not involve any value addition and therefore, cannot be regarded as service. Against the order, GOI has filed the appeal in Supreme Court which is still pending.
However, Govt has not waited for the result of the Supreme Court decision & has instead proposed to amend the Act itself by stating that the activity of renting of immovable property per se would constitute a taxable service under the relevant clause. And this amendment is being given retrospectiv effect from 01.06.2007.
Therefore it seems that irrespective of the supreme court decision, after passing of the Budget 2010 renting of immovable property will become taxable service with retrospective effect from 01.06.2007
AJAY MANDIWAL
(Dy.General Manager (Accounts))
(25 Points)
Replied 06 October 2010
Is there any service tax applicable on rental income ?
If yes than let me have copy of notification th mail
Madhukar N Hiregange
(Chartered Accountant)
(39034 Points)
Replied 06 October 2010
In my view there is no retorspective applicability as held recently in Trent Ltd case by the AP High Court.
Second the Delhi HC had stated that rent is not a value added service. This aspect has not been dealt with till today. therefore the doubt in the levy of ST on rent continues. However litgation / disputes are bound to be there.
DHC has again admitted the case [ after the amenment] and the outcome may determine the future course of action.
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