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Service tax on Renting
Practical options for Cenvat Credit / Valuation for the landlord and the
tenantby
s. jaikumar, advocate
Renting of immovable Property
Includes renting, letting, leasing, licencing or othersimilar arrangements of immovable property
for use in the course or furtherance of business or commercebut does not include
Renting by or to a religious body. Renting to an Educational body, other than
commercial coaching center.
Taxable Service
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
Immovable Property
Building and part thereof and the land appurtenant thereto.
Land incidental to the use of such building or part thereof.
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
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
Value of Taxable Service
Gross Rent – Property Taxes
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?
Can the rent be split into for the building and furniture / fixtures, etc.?
Threat of Business Support Service
Can the expenses like electricity, water, telephone be recovered separately?
Threat of Rule 5 of Valuation Rules
Cenvat credit for the landlord.
Major input services - Architect. - Construction service. - Interior Decoration. - Insurance. - Chartered Accountant. - Banking.
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
chennai - coimbatore - bengaluru - hyderabad - ahmedabad
THANKS