rent of immovable property by society

[satbir singhwahi]

A charitable religious society registered with Income tax . Has given premises on rent to Bank . Bank is Paying Monthly building rent of ₹ 73000 pm and Generator Rent of ₹ 20000 pm . Total Annual Rs 1116000. Whether liable for service tax.

[Mahir S]

As per clause 2(k) of the notification no. 25/2012, “charitable activities” means activities relating to -

(i)....

(ii) advancement of religion or spirituality;

 

Hence, if the said charitable religious society falls under the definition mentioned at (ii) above, then exemption from payment of service tax is available, else liable for payment of service tax.

[Akash Deep]

Dear Satbir,

the situation explained by you is not as simple as understood by my friend Mr.Naveed S. it can be no doubt that income of RS. 1116000/- is not generating for carrying out any charitable activity.had the income been generated from any charitable activity as defined under clause 2(k) of the notification no. 25/2012 dated 20.6.2012. the income generated from such services would have been exempted from service tax for the reason of being covered under entry 4 of the notification No. 25/2012 dated 20.6.2012.

in this case the subjected income on which applicability of service tax is the issue of this discussion, is generated from not charitable activity but from the activity of renting ogfimmovable and movable property.

i am of the view that view taken b7y Mr. Naveed S, in my personal opinion is not correct.

In my opinion Amount of ₹ 73000 is subject to levy of service tax and amount of ₹ 20,000/- may or may not be subject to levy of service tax depending on the fact whether effective control and possession of the generator has been transferred to the bank or not.

For detailed opinion and tax planning you cant contact me on 09873463912.

for

[YAGAY andSUN]

Dear Satbir,

In our opinion, you would have to pay service tax on INR 73000 (after deducting the property tax proportionately) as this income is not accrued from the activities specifically mentioned in the Service Tax Notification. On Income from renting of DG Set depending on the effecting control principle either VAT or Service Tax may be applicable.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Mahir S]

Yes, I agree with the above views.

The query was misunderstood and based on it the answer was provided.

[Arun Kumar Singh]

Exempt from service tax if services are fall under notification no. 25/2012-ST.

AI Summary

Exemption for charitable activities may not cover rental income from immovable property, making such rent taxable unless activity qualifies. Receipts from renting immovable property by a charitable society are not covered by the charitable exemption and are prima facie liable to service tax, with building rent taxable after proportionate property tax deduction. Receipts for generator hire turn on the effective control principle: transfer of control to the bank may shift tax treatment away from service tax, while retention of control keeps the receipt taxable.