Service Tax Liability on Rent

[Pratyush Parashar]

Dear Sir,

 

Need your guidance on the following issue :

Is a company is Liable to pay Service Tax on Rent Received for Guest House from another company whose the only source is rental income and has crossed the thrash hold limit of Rs.10 Lac in previous financial year.

 

Regards,

 

Pratyush

[kamal chordia]

if the property is not used for commerical purpose no need to pay service tax otherwise you have to pay service tax on abated value as per notification no 26/2012 of service tax. 

[YAGAY and SUN]

Yes, you are liable to pay the service tax on renting on immovable property.  In you case it is guest house.

AI Summary

Service tax on renting immovable property: commercial guest house rentals attract tax when threshold liability is met.
A charge to service tax arises on receipt of rent for use of immovable property used for commercial purposes; renting a guest house is treated as a taxable service when the provider's aggregate taxable value exceeds the prescribed threshold. Where the property is not used for commercial purposes, service tax does not apply, and for commercial guest-house rentals the tax is payable on the abated value under the applicable notification.