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Service tax on Service Apartments

Ranganath AAGJ (CA Final Student) (147 Points)

13 May 2008

hi all,

I wanted to just know whether service tax is applicable on renting of service apartments. The apartments are being rented out to companies on daily and monthly basis. Just let me know whether it comes under " service tax on renting of immovable property"

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10 Replies

Shekar (CA & LCS ) (1109 Points)
Replied 13 May 2008

Yes...Service tax is applicable..

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Deepak Sugandhi (Chartered Accountant) (45 Points)
Replied 13 May 2008

No. Please refer Service Tax by S S Gupta May 2007 Edn. page 1019-1020.

Certain properties are excluded;

(d) building used solely for residential purposes & buildings used for the purpose of accomodation, including hotels, hostels, boarding houses, holiday, accomodation, tents, camping facilities.

Hence I feel service apartments are exempt.

Taxguy (Consultant) (3383 Points)
Replied 19 May 2008

The use of the building is for commercial purpose and not residential, eventhough the person occupying the room will use it for residential use. Therefore, the service tax is applicable on the landlord owning the building for having rented it for commercial use. In most cases the providers of service apartments have taken the premises for rent. The service tax is on the landlord.

Deepak Sugandhi (Chartered Accountant) (45 Points)
Replied 19 May 2008

How different is it from a Hotel or boarding? Service Apartment is type of a Hotel, hence deserves same treatment as a hotel.

rupal maheshwari (CA PRACTICE) (23 Points)
Replied 26 December 2008

why we are not treated service appartments as a hotel

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Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 30 December 2008

Service Tax is leviable on renting of immovable property for commercial or industrial purposes.

The Landlord has rented the property to the service apartment management company. This is renting of immovable property for commercial purposes- and hence the landlord is required to pay service tax.

The service aprtment managemnt company renting the rooms to its clients for residential purpose, and hence no service tax is payable at this stage.

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 31 December 2008

My view is that since the property is to be used for accomodation it falls out of the defintion itslef and therefore there is a good reason for the landlord as well as the service apartment service providers NOt to charge the ST.

Warm Regards

Madhukar

CA. C V SURYAM (Practising Chartered Accountant) (865 Points)
Replied 19 January 2014

Sir, what about the present scenario post 01/07/2012 in case of service apartments? The entire building is letted out by individual owner to a firm and in turn this firm uses these premises for letting out to individuals/corporates to use for boarding/residence purpose for themeselves or for thier employees respectively. Next, what about food served/provided in these service apartments having air condition facility? Can I expect an early reply?