Service Tax on Commercial Property Rent on Receipt basis or Rent agreement?

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  1. brAjith

    brAjith New Member

    I am an individual and have rented a commercial property. The tenant does not pay the rent regularly. I have been paying income tax every year on receipt basis, and not based on the rental agreement, since the rent paid is always less than the amount shown in the rental agreement. Higher rent was shown in the agreement for safety purpose, in case the tenant does not vacate the building when needed. Can service tax limit of 10 lakhs also be calculated on receipt basis for an individual like me?
    Please clarify.
  2. In your case, Service tax should be paid on accrual basis.
  3. brAjith

    brAjith New Member

    As a small individual how can I afford to keep paying service tax without getting rent from the tenant? What will happen if the tenant does not pay the rent? I read somewhere that for individuals with less than Rs.50 lakhs annual income, service tax can be paid on receipt basis.
  4. Yes, Individuals and Firms can pay service tax on receipt basis if their turnover in the previous year is less than Rs.50 Lakhs.
  5. brAjith

    brAjith New Member

    Thank You. So I can opt for paying service tax on receipt basis , and need register only if rent received in a financial year exceeds Rs.9 lakhs? In case rent received is Rs.8.5 lakhs by January 2015, can I ask the tenant to delay payment till april 2015 and avoid the need for service tax registration for 2014-15?
  6. Yes, you can opt for that.
  7. ariff sait

    ariff sait New Member

    Since i have rented out a commercial office, where the total annual rental is approx. Rs. 650,000/-, I suppose that no service tax is due by the tenant to be paid to me. I do not need to pay any service tax to the service tax dept. as the total amount is less than Rs. 9.0 lacs.
    Please confirm by return.
    Ariff Sait
  8. Yes. You need not to pay service tax.
    rudrabose likes this.
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