Service tax on rent

Q: Is service tax payable on rent? What is current service tax in Chennai?

Muniraj, Chennai

4th September 2018

Property Tax in Adyar, Chennai

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service tax rate in chennai

service tax on rent

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Replies (3)

Hello Muniraj,
Yes, a tenant has to pay service tax as it is declared service. However, there are certain exemptions and condition for it.

Tenant need not to pay service tax when the residence is used for residing but in case for commercial activity the same is covered
However, he or she is not liable to pay service tax unless it exceeds threshold limit of service tax which is 10 Lakhs.
Renting of vacant land is not taxable
Renting of property to educational institution and RBI is also exempted.

Anusua Pillai, Bangalore

14th September 2018

Comment

From the 1st of June 2016, service tax is levied at 15% of the value of taxable services under Section 66 of the Service Tax Act. The 15% includes 0.5% Krishi Kalyan Cess and 0.5% Swach Bharat Cess. And , it is the sole duty of landlord to pay service tax but landlord shift their burden to tenant and he or she has to pay on behalf of the landlord.

Devendra, Chennai

14th September 2018

Comment

Hello Muniraj,
The tenant is not liable to pay service tax under law. The legal liability is that of the landlord.It is just like Sales Tax or VAT liability are passed on the end user when buying a pack of Maggi Noodles, the same is the case with the tenant-landlord situation. The service tax liability is effectively transferred to the end-user (tenant) and he or she has to pay it out of pocket to the landlord, who then deposits it with the designated authority.

Ram Gopal, Chennai

14th September 2018

Comment

At present, the services sector is taxed at 14% with two additional cesses - Swachh Bharat Cess and the Krishi Kalyan Cess, attracting 0.5% each - taking the burden to 15%.

However, those whose annual income is less than Rs 20 lakh will not have to register under the GST or pay any service tax. Currently, service tax has to be paid if the income is above Rs 10 lakh.

Rajesh, Delhi-NCR

14th September 2018