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Total Number of Subscribers: 426 |
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Date: 23 April 2008 |
Compiled by Mr. M. Sathya Kumar |
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Track the Service Tax....! Landlords Bowled
out by Tenants on Service Tax Liability The levy of Service Tax on commercial
renting with effect from According to RS Sharma
Advocate....... The landlords being a service provider are
liable to pay service tax to the Government under the service tax laws. The
landlords are also required to be registered with the Service Tax Office
having jurisdiction over the location of the property. The demand of service
tax will be issued by the service tax department to the landlord. Even if a
tenant does not reimburse service tax to the landlord ; the landlord will
have to pay service tax on his own. It can not be an excuse for not paying
service tax that the tenant has not paid the service tax component to
landlord. The only remedy available to landlords is to file a suit for
recovery of service tax from the tenants. In most of the cases; the existing rent
agreements have no clause about the service tax and in the absence of such
clause; it is not easy for landlords to recover service tax from the tenants.
However, in cases where the rent agreement has a clause like “all future tax liability arising out of this agreement
will be paid by the tenant”, the landlords may be successful in
recovering service tax from the tenants. The only solace to
landlords is that the Property Tax amount paid can be deducted from the
rental value for payment of service tax. Further, small landlords whose rent
receipts are below Rs 8 Lakh from The scope of “renting of immovable
property” under the service tax includes renting, letting, leasing, licensing or
other similar arrangements of immovable property for use in the course or
furtherance of business or commerce but does not include- (i) renting of immovable property by a
religious body or to a religious body; or (ii) renting of immovable property to an
educational body, imparting skill or knowledge or lessons on any subject or
field, other than a commercial training or coaching centre; The term“for
use in the course or furtherance of business or commerce” includes use of
immovable property as factories, office buildings, warehouses, theatres,
exhibition halls and multiple-use buildings "taxable service" means any
service provided or to be provided to any person, by any other
person in relation to renting of immovable property for use in the course or
furtherance of business or commerce. “immovable
property” includes— (i) building and part of a building,
and the land appurtenant thereto; (ii) land incidental to the use of
such building or part of a building; (iii) the common or shared areas and
facilities relating thereto; and (iv) in case of a building located in
a complex or an industrial estate, all common areas and facilities relating
thereto, within such complex or estate, but does not include- (a) vacant land solely used for
agriculture, aquaculture, farming, forestry, animal husbandry, mining
purposes; (b) vacant land, whether or not
having facilities clearly incidental to the use of such vacant land; (c) land used for educational,
sports, circus, entertainment and parking purposes; and (d) building used solely for
residential purposes and buildings used for the purposes of accommodation,
including hotels, hostels, boarding houses, holiday accommodation, tents,
camping facilities. An immovable property partly for use in the
course or furtherance of business or commerce and partly for residential or
any other purposes shall be deemed to be immovable property for use in the
course or furtherance of business or commerce. |
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