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Service tax on Renting

Explore practical options for claiming Cenvat credit and determining valuation for renting immovable property. Discover tips and threats to consider, along with recent LB decisions.

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Service tax on Renting

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  1. Service tax on Renting Practical options for Cenvat Credit / Valuation for the landlord and the tenant by s. jaikumar, advocate

  2. Renting of immovable Property Includes renting, letting, leasing, licencing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include Renting by or to a religious body. Renting to an Educational body, other than commercial coaching center.

  3. Taxable Service F Service provided / 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

  4. Immovable Property F Building and part thereof and the land appurtenant thereto. F Land incidental to the use of such building or part thereof. F Common or shared areas and facilities relating thereto. • In case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex

  5. Exclusions • Vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes. • Vacant land, whether or not having facilities clearly incidental to the use of such vacant land • Land used for educational, sports, circus, entertainment and parking purposes. • Building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, boarding houses, holiday accommodation, tents, camping facilities

  6. Value of Taxable Service • Gross Rent – Property Taxes

  7. Certain Tips • Be a Joint Owner and claim exemption upto Rs. 8 lakhs. • Status of advances. • What if no rent is taken but a hefty advance is is taken?

  8. Can the rent be split into for the building and furniture / fixtures, etc.? Threat of Business Support Service

  9. Can the expenses like electricity, water, telephone be recovered separately? Threat of Rule 5 of Valuation Rules

  10. Cenvat credit for the landlord. • Major input services - Architect. - Construction service. - Interior Decoration. - Insurance. - Chartered Accountant. - Banking.

  11. Construction of a building was completed in 2006 and service tax charged. can credit of such service tax be taken, after 01.06.2007? Recent LB Decision in Spenta International Ltd Vs CCE 2007 (216) ELT 133 Tri – LB

  12. THANKS chennai - coimbatore - bengaluru - hyderabad - ahmedabad

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