Service Tax on Rental Income

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  1. Jose John

    Jose John New Member

    Dear Sirs,

    I am property owner and my building is Ground plus two levels (Ground, 1st Floor and 2nd Floor).

    From July 1st onward I am renting this building to a dental clinic. Current status of the property is Residential. But now, they wanted to use the ground floor for the clinic and other 1st and 2nd floor will be for their staff to stay.

    1. We are planning to convert the ground floor as commercial for the registration of their clinic
    2. Do I have to collect service tax only on the rent of ground floor or service tax would be charged to the entire floors.
    3. As I am an NRE, not very familiar with the tax systems. Is service tax levying from the tenant or the building owner?
    4. Do I have to specifically mention it on the tenancy contract or legally understandable that who has to pay the service tax?

    Kindly reply.

  2. ZED

    ZED Well-Known Member

    ST will be charged if the gross rental income exceeds 10 Lakhs in a financial year.

    Service provider has to pay service tax to the govt. and the same can be collected by him from the service receiver.

    You can add into contract that all the taxes,duties, other liability under any Act in respect of this transaction shall be borned by the service recepient.

    [Still, you will have to file ST return and pay money to govt. , by above clause you can recover so much of the money from the service receiver.]
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