Service Tax on Commerical Rentals

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  1. Kashif Ahmed

    Kashif Ahmed New Member


    I have a doubt on Service Tax on commercial rentals. Is there any law that states that the Service Tax needs to be paid by the “organization” too who is using the commercial space or only the owners of the commercial space needs to pay ST?

    To specify, the commercial rental which we are using is jointly owned by two siblings and the amount when taken as a whole exceeds 10 lakhs p.a., but the rent is divided into two parts equally to them every month, which does not exceed 10 lakhs per person.

    Looking forward for your generous replies.


    VAIBHAV DILIP RANE Active Member

  3. Kashif Ahmed

    Kashif Ahmed New Member


    Thanks a lot for your prompt response and I appreciate it.

    But I am still in doubt that whether the tenants of the official space are also liable to pay Tax along with the owners of the official space?

    Anticipating your humble answer.
  4. Karan Batra

    Karan Batra Well-Known Member

    Dear @Kashif Ahmed

    The Service Tax is paid by the tenant to the landlord who then deposits the same to the Govt.

    So the landlord does not have to pay any Service Tax from his own pocket. His responsibility is to collect the Service Tax from the tenant and then pay to the Govt.
  5. Kashif Ahmed

    Kashif Ahmed New Member

    @Karan Batra

    Thanks a lot for your response, now its clear to me.
  6. Aditya Mukerjee

    Aditya Mukerjee New Member

    Hello Karan,

    I have a question, I am setting up an office in India of a parent company being in the US. I have been reading your blog and what I understand is, I need to pay service tax (12.36%) to the landlord but do I need to pay Service Tax even if the annual rent is below 10 lakhs?

    Also, can you explain TDS on rent more? Do I need to charge my parent company 10% extra on the total invoice since there will be a 10% deduction?

    Thanks for the help!

    Aditya Mukerjee
  7. Karan Batra

    Karan Batra Well-Known Member

    Dear @Aditya Mukerjee

    Service Tax Limit of turnover of Rs. 10 Lakh is for the service provider which in this case would be the landlord. So in case your Landlord is receiving Rent from other properties as well or in case he is providing some other services and the total aggregate value of Rent/ Services is more than Rs. 10 Lakhs, Service Tax would be liable to be paid.

    At the time of payment of Rent, you would be required to deduct 10% from the Rent and deposit it with the Govt. For eg: If your agreement is to pay Rs. 50,000 per month, TDS @ 10% would be Rs. 5,000 per month.

    You will pay Rs. 45,000 per month to the landlord and Rs. 5,000 would be deposited as TDS with the Govt. So your total outgo will remain the same i.e. Rs. 50,000 per month but the amount received by the landlord would become Rs. 45,000.

    Feel free to ask in case of any other query.
  8. johnsmith1987

    johnsmith1987 New Member

    In response to your reply I have a query for that statement .Sir can you provide me with some rules or act by the govt saying your statement, not that I am judging your ans but I am also juggling through the same problem
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