Payment of Service Tax on rent recovery.

[Ashwin Garg]

Sir,

We are a manufacturer located in remote village and besides factory, residential colony is situated. All quaters, shops, offices, halls are constructed by company. We are recovering nominal rent as detailed below and it is shown as miscellaneous income in P and L :

a) Employees Quaters : Say ₹ 100 per month from salary

b) Workers Quaters : Say ₹ 50 per month from salary

c) Shops : Say Rs 1,100 per month

d) Mobile Tower rent towards open space : Say Rs 4,000 per month

e) Banks and ATM : Say ₹ 2,000 per month

f) Transporter Office : Say ₹ 1,000 per month

g) Community Hall towards facilities provided like light, cleaning charges.

Besides above we are also recovering electricity charges from above users which is supplied from our captive power plant and understand that no service tax is payable since electricity is 'goods' and the charges are shown as miscellaneous income in P and L.

Querry :

a) on which of above activity we need to pay service tax

b) under which head we need to pay service tax

c) whether we need to pay service tax on electricity charges recovered

thanks in advance

ashwin

AI Summary

Service Tax Debate: Are Rent and Electricity Charges on Properties Subject to Tax? Conflicting Consultant Opinions Arise. A manufacturer in a remote village inquires about service tax obligations on rent recovery from various properties, including employee quarters, shops, and facilities like mobile tower spaces. They also seek clarity on service tax applicability to electricity charges from their captive power plant. One consultant advises that service tax should be charged on all activities except employee and worker quarters, including electricity charges. Another consultant argues that no service tax is needed, as the accommodations and facilities provided do not constitute commercial activities.