Dear Sir,
I have rented my residential house to one of the corporate house to use the same as hostel for their employees. The corporate house is not charging any rent from its employees.
Kindly confirm, since it is a residential property and rented only for use as residential dwelling hence no service tax is applicable
or
it is a property given for commercial use , hence service tax is liable to be charged ?
CA Hiren Thakker.
Service Tax Applies on Residential Property Rented to Company for Employee Accommodation, Considered Commercial Use. A corporate house rented a residential property to use as a hostel for its employees without charging them rent. The property owner inquired whether service tax applies, given the residential nature of the property. A respondent clarified that since the property is rented to a company, which uses it in furtherance of business by providing accommodation to employees, it is considered a commercial use. Therefore, service tax should be paid on the rental income. The property owner expressed confusion between the residential use and the commercial intent but appreciated the prompt response. (AI Summary)
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