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

Service tax liability on renting of immovable property rests with the service provider, not the tenant.
The document states that service tax on renting of immovable property is a tax on the provision of the service and the liability to pay rests with the service provider (landlord), not the tenant. It notes that separate owners with distinct inherited interests may claim exemption individually, while jointly operating co owners providing rental services may be treated as an Association of Persons or Body of Individuals and have their turnover clubbed for the small service provider exemption; artificial splitting to avoid tax is vulnerable to challenge.