SERVICE TAX ON RENTING OF IMMOVABLE PROPERTY SERVICE

[VINOD KUMAR]

Dear Experts,

Good Evening to all.

Sir, One of my clients has taken a building on rent from a person in 2012-13. He is paying Rs. 1,00,000/- per month rent. As per his knowledge, the landlord has not paid any service tax on this amount. According to rent agreement, he has deliberately tried to evade the Service Tax because as per rent agreement the rented property is in the name of both his wife and son i.e. he has tried to split the rent of Rs. 12,00,000/- per annum in Rs. 6,00,000/- per person (perhaps to keep below the SSI limit of Rs. 10,00,000/- and to avoid the Service Tax).

Sir, Please guide whether he is right in doing so. Whether he is liable to pay the Service Tax. Whether I am liable to pay the service tax.

AI Summary

Landlord Faces Penalties for Splitting Rental Income to Evade Service Tax; Exemptions Explained for Inherited Property A client rented a building in 2012-13 for 1,00,000 per month, and the landlord allegedly avoided service tax by splitting the rental income between his wife and son to stay below the 10,00,000 exemption limit. An expert clarified that splitting income to evade tax is not permissible, and the landlord is responsible for paying the service tax. Another expert noted that if the property is inherited, separate exemptions are possible, but if jointly purchased for business, the income is combined, and the exemption limit applies to the total turnover. The landlord may face penalties for non-payment.