Renting of immovable property

[Sushil Aggarwal]

As per a renting agreement entered into in 2006, a token amount is fixed as monthly rent for the next 25 yrs while a security for a huge amount has been taken. No service tax was prososed as the same was not applicable at that time.

The query is what would be the gross value for service tax. Whether the Service Tax determination Rules would be attracted, keeping in view that no other consideration is being received in kind or otherwise. 

[Brijesh Verma]

Dear ASAP AUDIT

Your query doesnt specify the nature of the deposit.... if the same can be proved as a refundable deposit then I am sure Valuation Rules dont apply.... In the other case my answer would vary!!!

AI Summary

Service tax valuation: refundable security deposit excludes valuation rules; non refundable deposit requires valuation assessment. Service tax valuation is queried for a long-term lease with token rent and a large security deposit. If the deposit is proved to be a refundable deposit, the Valuation Rules do not apply; if not refundable or treated as consideration, the applicability of Valuation Rules and the gross value for service tax must be determined accordingly.