service tax applicability on property taken by company for accomodation to its employees

[Asked by Guest]

Fact: Mr A, director is giving residential property to Co. on rent of ₹ 24 Lacs p.a. The rent paid by Co. is considered as business expenses for which deduction is taken in Income tax. On the other hand Co. has provided the same property to director as rent free accommodation.

• As we know the renting of residential property for residence purpose is under negative list in service tax. In the above case the property is residential in nature but since the property is given to a company so would it fall under the category renting of residential property for the furtherance of business & profession ??

AI Summary

Renting residential property: taxable if used or contracted for business purpose; agreement and actual use decide service tax liability.
Renting of immovable property for residential purpose is exempt from service tax, whereas renting for business purpose (including providing accommodation that furthers employer's business) attracts service tax; the rental agreement's terms and actual use determine whether the residential exemption applies or the rental is treated as taxable business purpose.