Eligible for Service Tax or Not
Santosh Kr. Agarwal
(Querist) 07 June 2011
This query is : Resolved
B receive the Guest House from A (Owner of the Guest House) @ of monthly rent of 85000/-(per month). B then give the guest house on Rent to C @ 260000/- per month.
i)Is A should charge Service Tax on Bill to B amounting 85000/-.
** He deduct TDS 8500/- on Rent.
ii) Is B should charge Service Tax on Bill to C amounting 260000/-.
** He deduct TDS 26000/- on Rent.
Please advice since both A & B are not registered to Service Tax.
What are the Criteria of Service Tax deduction.
R.Ramachandran
(Expert) 08 June 2011
When B takes on rent the Guest house, it is for commercial purpose. Similarly when B rents out the Guest house, again it is for commercial purpose.
Therefore, when the gross consideration in a year is more than 10 lakhs, when an immovable property is rented out for commercial purposes, then the same will attract service tax both in the hands of "A" and "B".
A & B have to get themselves registrered under Service Tax and pay service tax.
