Latest on Rental Service Tax implecations

Definition of “Renting of Immovable Service”: –

Service Tax was levied on Renting of Immovable property service from 01.06.2007 by the Finance Act, 2007. The definition of the words ‘renting of immovable property’ has been given in clause (90a) of Section 65 of the Finance Act, 1994. The said definition is reproduced hereunder for ready reference:

(90a) “renting of immovable property” 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;

Explanation 1.—For the purposes of this clause, “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;

Explanation 2.— For the removal of doubts, it is hereby declared that for the purposes of this clause “renting of immovable property” includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property;

The taxable service of renting of immovable property on which service tax was levied has been defined in sub-clause (zzzz) of Section 65 (105) of the Act, reproduced hereunder:

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2 thoughts on “Latest on Rental Service Tax implecations

  1. Is the assessee liable to pay interest and penality on the service tax due.
    The matter was stayed by high court in our opinion there should be no interest and penality on service tax due. kindly calrify

  2. Rent on any property is the reward on the use of asset of return on capital invested which is much below the inormal Public sector bank interest.Taxing this income as service is not correct .There is no skill or effort involved its only return on the property.If some one takes property on lease and again gives the same on sub lease there is some skill or effort the differential rent can be taxed for service tax.But the initial rental which the land lord gets id the charges for the use of asset which should not be included in the purview of the Service tax.Thanks
    Mihir Kumar Sahu FCA.

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