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Service Tax Issue : Renting of immovable Property
Service Tax Issue : Renting of immovable Property

13 points about service tax on renting of immovable property

Renting of immovable property is a service and is subject to service tax. Queries on whether all types of properties are covered, how much is covered, what is not covered, etc are dealt in this article.

 1. Security or Rental Deposit Service Tax is not applicable to any amount that is refundable and collected from the tenant as security or rental deposit. However, non-refundable deposit is subject to service tax.

 2. Reimbursement of actual Electricity Charges – are not subject to tax provided the exact/actual amount is collected as a pure agent. In case any markup (extra amount) is done on the bill or a lump sum amount is collected towards electricity charges, it is subject to ST.

 3. Maintenance Charges – towards the building is subject to service tax.

 4. Renting of Vacant Land say, for parking or for temporary shed for marriage or for social function is subject to service tax except if the land is used for agriculture or agriculture related activities such as horticulture or floriculture or animal husbandry.

 5. Renting of Residential House – if used for residential purpose is exempt from service tax. However, renting of residential house for commercial purpose is subject to ST.

 6. Renting of Hotel, Inn, Guest House, Club, campsite or other commercial places meant for residential or lodging purposes having declared tariff of a room below Rs.1000 per day or equivalent is exempt from Service tax.

 7. Rent from space provided to Mobile Towers Service tax is applicable.

 8. Rent from space provided for Vending Machines in a shop or complex – service tax is applicable.

 9. Renting of Convention Center – Service tax is applicable.

10. Service Tax Rate – at 12.36% on the gross rent. The land owner can raise an invoice every month mentioning the rent plus service tax.

 11. Deduction from Rental Income No expense such as security charges, electricity charges are allowed to be deducted from the gross rent, except property (municipal taxes) paid.

 12. Liability of payment of taxService recipient / tenant is liable to pay service tax. It is the responsibility of the land owner to collect it from the tenant and remit it to the department.

 13. Payment of Tax – the tax so collected has to be remitted to the department within due date [5th of the subsequent month/quarter depending upon the nature of the assessee; 6th of the subsequent month/quarter, if the payment is made electronically through internet banking]. Delayed/ non-payment attracts hefty interest and penalty.

 

Next: Service Tax on maintenance charges collected by Apartment Owners Association

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 Also Read : 13 things to know about payment of Service Tax


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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm. For further information or query, please email it to [email protected]
  • shoaib

    are service tax applicable to rents from a trust office

  • Muralidharan Narayan

    Is ministry of corporate affairs (MCA) is exempted from service tax on rent?? pls get back

  • Subbu Kolar

    ex rent of property is 300000 service tax is 14% who should pay the service tax tenant or owner of building

    • simplifiedlaws

      Service tax liability is on the owner of property who let out commercial building

  • Ady

    Is service tax to be paid on rent which has not yet been received? The tenent has not paid rent for 3 months. Due to litigation he is not paying the service tax either. Am I required to deposit the service tax with the department despite the fact that I have not recvd any rent?

  • Puttaraju

    a very nice topic of discussion