SERVICE TAX ON RESIDENTIAL HOSTEL HIRED TO A CORPORATE HOUSE FOR THEIR EMPLOYEES

[Hiren Thakker]

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.

AI Summary

Renting of immovable property may attract service tax when provided to a corporation for employee accommodation.
The statutory definition of renting of immovable property includes arrangements for use in the course or furtherance of business; where the lease or license is granted to a corporate and the company provides accommodation to employees free of charge, the property is used by the company in the course of its business, and therefore, on the view expressed, service tax is payable on the rent income received from the corporate.