Applicability of service tax on 'renting of immovable property'

[Guest]

Whether the levy of tax on 'renting of immovable property' covers sharing of business premises between group companies. For example, If company 'A' taken the premises on rent for a monthly rent of Rs.50000/- and pays the rent to Owner. The owner may or may not levy service tax, depending upon his annual service income. If 'A' company allows portion of premises to be occupied by its group company 'B'and recovers proportionate rent (without any additional mark up), whether such sharing of rent would also attract service tax?

AI Summary

Debate on Service Tax Applicability for Shared Rental Spaces Among Group Companies: Is It Sharing or Sub-letting? The discussion addresses whether service tax applies to the sharing of rented business premises between group companies. Company 'A' rents a property and pays rent to the owner, who may or may not charge service tax. If Company 'A' allows Company 'B' to use part of the premises and recovers a proportionate rent, the question is whether this arrangement attracts service tax. One respondent suggests that the distinction between property sharing and sub-letting is crucial, as sub-letting is taxable. Another agrees, stating that while sub-letting is taxable, sharing expenses, including rent, is not subject to service tax.