Service Tax on Renting of Immovable Property

[R MUTHURAJ]

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

 

AI Summary

Service tax on commercial renting may extend to bundled residential tenancies where a single lease covers mixed use.
Service tax does not apply to bona fide residential rents under the negative list, while rents for non-residential or guest-house use are taxable subject to thresholds. If a single lease bundles residential and commercial uses, the whole receipt may be characterised by the highest-liability component (commercial renting). Advisable measures include separate lease deeds and ensuring the building plan reflects residential use for exempt units.