Service tax after tds

[Asked by Guest]

Please inform if Service tax on rent will be payable by Landlord or Tenent. will it be charged after TDS

[Surender Gupta]

As per the provisions of statute, service tax is to be paid by the landlord. TDS is to be deducted on gross value inclusive of Service Tax

[Madhukar N Hiregange]

This is a major problem where the contracts are netered into earlier. Where the contracts mention servcie tax included then there is no doubt that the landlord is liable under contract act. However when entering into a contract even where the contract is inclusive of all taxes, the fact that service tax was not applicable as on that date I understand amount to NO CONSENSUS OF MIND. There may bea civil remdy. However under ST provisions the amountof rent recived by the landlord would be said to be inclusive of ST and to that extent marginal relief maybe possible.

As per the provisions of Service tax law, tax liability would fall on landlord and it is his obligation to register and pay the tax. However, service tax being indirect tax levy, the same can be recovered from the tenent by raising a bill. With regard to TDS, as per Sec.194I of IT Act, rent means any payment by whatever name called for the use of the premises.... Service tax is charged on rent for the use of premises by the tenent only and hence TDS is deductible on the gross amount paid including service tax on rent.

AI Summary

Service tax on rent: landlord bears liability but may recover from tenant; TDS is deductible on gross payment.
Service tax on rent is the landlord's statutory liability, who must register and pay the tax but may recover it from the tenant. Contractual terms stating taxes are included or predating the levy may affect civil allocation but do not displace the statutory charge. TDS under the income tax provisions is to be deducted on the gross rent payable, inclusive of service tax.