Dear Sirs,
We are the group of companies having two plants in nearby distance with different registration, due to shortage of space one factory has given some ware space to another by preparing lease agreement on token amount as rent, this amount has been reflected in balance sheet as rental income, which is less than 2 lacs yearly,
Please advice whether the leassor factory is liable to pay service tax ? if yes then Leasee can take credit of this service tax ?.
Request to suggest your expert advice on this issue please.
Thank you,
Mitesh
Service Tax Exemption on Rental Income Below 10 Lakhs Explained; Key Conditions and Turnover Impact Discussed A company with two plants entered into a lease agreement for space rental, generating less than 2 lakhs annually. They queried whether this rental income attracts service tax and if the lessee can claim credit. Responses indicated that if the annual rental income is below 10 lakhs, service tax is not applicable according to Notification No. 33/2012-ST. However, if the total turnover in the preceding year exceeded 10 lakhs, the exemption does not apply. The discussion also highlighted that service tax is levied on commercial rentals, and balance sheets are used for service tax audits. (AI Summary)
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