Service Tax on rental Income.

[Neha Bohra]

Resident of India having 2 properties,

One House Property Located at USA let out for Residential purpose and One property located in India Let out for Commercial purpose

Whether Rent From both of the property Included in Taxable amount for the purpose of service Tax?????

(my observations are

1st if property let out for residential purpose then it would not be included in Taxable turnover(covered in negative list) therefore Only Indian rent is taxable as property given for commercial purpose.

2nd Observation on the basis of place of provision rule if Person providing services more than one location including a location in taxable territory, its place of provision in taxable territory.)

[Ganeshan Kalyani]

Reply to Query 1:

As per rule 5. The place of provision of services provided directly in relation to an immovable property, including services provided in this regard by experts and estate agents, provision of hotel accommodation by a hotel, inn, guest house, club or campsite, by whatever, name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including architects or interior decorators, shall be the place where the immovable property is located or intended to be located.

In view of the above provison service tax is not applicable on income from property rented at USA .

Reply to query 2 :

service tax is applicable on rental income from property within India .

AI Summary

Place of provision rules determine that only rental income from property located in taxable territory attracts service tax. Place of provision rules treat services directly related to immovable property as supplied at the location of the property; therefore rental income from property located outside the taxable territory is not subject to service tax, while rental income from property situated within the taxable territory is taxable, with residential lettings addressed by negative-list exclusions and commercial lettings within the charge where located in the taxable territory.