property tax

[Guest]

hello sir

we have rented our hours for apollo college students which completely mamaged by apollo. we get payments from apollo only as monthly rent after deducting tds 10%. can u suggest me will giving rent to hostel apply changes in property tax. it is consider commercial or residential.

[Rajagopalan Ranganathan]

Madam.

You are renting your property to Apollo for using the same as student hostel. Therefore the purpose is for business/commercial. Therefore it is liable for service tax under renting of immovable property service. As per Notification No. 29/20012-St dated 20.6.2012 you can exclude property tax paid on the property while calculating the taxable value. You cannot exclude 10% deduction which I suppose to be TDS under Income Tax Act.

[KASTURI SETHI]

(As per title of query is about Service Tax). If residential property is rented out for commercial purpose, it will be considered commercial. Note the language of Section 66 D (m) of the Finance Act, "Services by way of renting of residential dwelling for use as residence". If house is rented out as residence, it will be under the negative list. If residential house is rented out for commercial purpose, it will not fall in the negative list. In your case it is commercial activity. First part already stands replied by Sh.Ranganathan, Sir. You must also go through serial no.18 of Notification No.25/12-ST dated 20.6.12.

[YAGAY andSUN]

Agreed with the above replies. Further, if Service Tax is being shown separately on the Invoice, then TDS @ 10% shall not be deducted on gross value of the bill.

[Ganeshan Kalyani]

Sir, in support of M/s Yagay and Sun's submission i would like to add that TDS is not to be deducted on service tax component if the same is shown separately on the face on the invoice. Refer Circular No. 1/2014 dates 13.01.2014 in this regard. Thanks.

[Ganeshan Kalyani]

Sir, I also in line with the views of Sri Rajagopalan Sir and Sri Kasturi Sir. Additionally I would like to mention that the SSI exemption is also need to be take benefit of. Thanks.

[KASTURI SETHI]

I agree with the views of Sh.Ganesh Kalyani, Sir. Service Tax is leviable on the amount of TDS.

[santhosh kumar]

meanwhile one doubt..is the property tax applicable for ex-servicemen in tamil nadu ?

[DR.MARIAPPAN GOVINDARAJAN]

Even if it is applicable, it is only for individual case but in case of commercial there may be no exemption.

[KASTURI SETHI]

I agree with the views dated 9.9.16 of Sh.Govidarajan Sir.

AI Summary

Renting Residential Property as Student Hostel Considered Commercial, Subject to Service Tax; TDS Deductions Apply with Conditions. A property owner inquired about the tax implications of renting a property to a college for use as a student hostel, specifically whether it would be considered commercial or residential for property tax purposes. Respondents clarified that renting a residential property for commercial purposes, such as a hostel, is considered commercial. Consequently, it is subject to service tax under the renting of immovable property service. While property tax can be excluded from the taxable value, TDS deductions cannot. Additional advice included not deducting TDS on the service tax component if shown separately on invoices.