Renting of commercial land

[Suhit Aggarwal]

Whether service tax is payable under the category ' Renting of Immovable Property' for renting of commercial 'Land' on which tenant will build its own building? Will it be cover in exclusion in explanation 1 to immovable property for vacant land, whether or not having facilities clearly incidental to the use of such vacant land?

[Ravi Chopra]

if you have permitted the construction on the land, the same would be covered within the purview of service tax net as soon as building would be constructed.

[Guest]

I think, you should ascertain that after construction of building, by the tenant, whether the status of the property would remain same or not. it is immaterial that who is constructing. What is material is that what is let out. The issue of status must be decided first.

AI Summary

Renting of immovable property: service tax applies when tenant-built structures change the property's status and are let out. Whether rent of commercial land attracts service tax depends on the post-construction character of what is let: if the tenant constructs and the letting is of a building or land with structures incidental to use, it falls within the service tax net; if the property remains vacant land within the exclusion, service tax may not apply. The identity of the party who constructs is immaterial; the decisive question is the property's status after construction.