Hi,
An Individual has an apartment containing 5 Flats meant for residential purpose. He is collecting Rs.6 lacs p.a as rent from each flat and in total Rs.30 lacs.
1 Flat is rented for running office and rest of the 4 Flats are residential.
In this case whether service tax is needs to paid?
What would be the case, the 1 Flat used for running office had been used as the Guest House of the Company?
Seeking experts opinion.
Thanks & Regards,
R.Muthuraj
Service Tax Applies to Office Use Rent; Residential Rents Exempt. Separate Leases Recommended for Mixed-Use Properties. An individual owns an apartment with five flats, collecting a total annual rent of Rs. 30 lakhs. One flat is rented for office use, while the others are residential. The query seeks clarity on service tax applicability. Responses indicate that service tax applies to the rent from the flat used as an office or guest house, as commercial rents are taxable. Residential rents fall under the negative list, exempt from service tax. If a single lease covers mixed-use, the entire rent could be taxed at the highest applicable rate. A separate lease is advised for clarity and compliance. (AI Summary)
TaxTMI 
TaxTMI 
