Dear experts,
I am a property owner and i had given my property to some individual fr their business purposes but due to some reason i requested to him for vacant my property and he wants Rs. 1 crorre as compensation. And i have heard about service tax on
5.7 Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act
In terms of this entry the following activities if carried out by a person for another for consideration would be treated as provision of service.
- Agreeing to the obligation to refrain from an act.
- Agreeing to the obligation to tolerate an act or a situation.
- Agreeing to the obligation to do an act.
Then is my act covered under service tax purview?
Tenant Demands Rs. 1 Crore; Service Tax Implications Explored on Lease Termination Compensation and Arbitration Settlement A property owner requested a tenant to vacate a leased property, leading the tenant to demand Rs. 1 crore as compensation. The owner inquired whether this payment falls under service tax obligations. An expert clarified that service tax applies to renting immovable property for business use, suggesting that if Rs. 1 crore is paid, it might be subject to service tax. The owner further explained a dispute resolved by arbitration, resulting in a Rs. 5 crore payment to the tenant, which increased the property's cost. Another expert noted that such compensation typically does not attract service tax unless it represents consideration for a specific service. (AI Summary)
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