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Is levy of Service Tax on Owners of Rentted Commercial Buildings justified? is not Service,is righttransfer?


It has been challenged in Bombay High Court whether Service Tax imposed from this year making landlords of Commercial Buildings liable to pay Service tax on rents receieved from many tenants in such buildings!
As an affected party I agree with contention that renting is not a service! In fact Property taxes,Income taxes on such buildings take away the major part of rent and high Service Tax on top will leave nothing for landlords and make such investments unviable!
Also this is not really a Service within definition of Service Tax Act.As contended it is a temporary transfer of rUsufruct Rights to tenants!Also Registration Fees on these leases has to be paid on leases over a yea5r mandatoryily. Thus the landlords will be left with nothing ,but whole income taken as taxes by Central?State Governments in many cases!
There is a need to review this decision which is difficult to implement as landlords cant recover from tenants where leases were executed prior to This levy! Hari Gautam O

No doubt rent is not a service which falls under service tax but what can we do when govt. feels to recover huge taxes we are at their womb and to collect from the tenants and pay the same to the govt. treasurer.

Let us hope that the High Court passed a favourable order.

All the points mentioned by you are right. There should not be service tax on rent.

But it is not applicable to the persons (land lords ) who receive rental income less than Rs. 8 lakhs per annum. Further it is to be recovered from the tenants, so in fact it is not burden on property owner. Only collecting and depositing and filing returns etc. etc are burdens on him.

It is provided in law that it is to be recovered from the tenants, so tenants cann't deny payment of it. In your agreement with the tenant also it is understood that the government levies are to be borne by the tenant.

Though the levy of service tax on rental income is not justifiable, to be on safer side the landlord should charge it on tenant and pay to the govt.

I am not consultant in this field but whatever is in my knowledge I have stated it here. It is better to get advise of best consultant.

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