Service tax on rent from banks
tarun
(Querist) 08 August 2014
This query is : Resolved
Sir,
I am planning to give my property to a bank on rental basis . But I am confused here about service tax, that who has to pay it whether bank or the landlord. Here I am the service provider and bank is the recipient of the service and I have read at many place over the internet that the recipient of the service will pay the service tax but service provider will have to collect it from the recipient of service which is bank here .I want to know whether I am correct here .
Also sir Banks usually make lease agreement in such a manner that the landlord has to pay service tax. Like they will wright in their agreements "all taxes and future taxes including service will be borne by the landlord" . Stuff like that So Sir what should be done in this case ?
Devajyoti Barman
(Expert) 08 August 2014
The lessee or tenant will have to pay the service tax, not the landlord.
tarun
(Querist) 09 August 2014
sir devajyoti do you have links of the document to support your ans . because I have to show the banks the same.
Advocate Ramesh
(Expert) 09 August 2014
If in agreement mentioning that that landlord has to pay service tax, then how can landlord refuse to pay service tax. You must pay service tax.
tarun
(Querist) 09 August 2014
But like in restaurants the service tax and other taxes are separately collected from customer apart from main bill. So I am asking here that even if service tax has to be borne by the landlord but shouldn't it be collected from bank .
ajay sethi
(Expert) 09 August 2014
it depends upon your negotiating skills with bank . refuse to give premise on rent until bank agrees to pay service tax
tarun
(Querist) 09 August 2014
Thanks all for your valuable suggestions
Y V Vishweshwar Rao
(Expert) 10 August 2014
1- In all the cases -this issue being raised with institutions in the matter of Service Tax on Rents
2- It is True the Tax is to be paid by the Service provided ( by collecting from Customer)
3- Clearly Verify Lease Deed clauses and it may be declared that the in addition to Rent the Lessee shall pay /or/reimburse to the Lessor /- the Service Tax on rent- to be paid/ or/ paid by the Lessor .
4- However the Lease Agreement is basis for the liability of Service Tax - Lessee to pay/ bear / or / Lessor to pay within the agreed Rent per month
6- A clause may be insisted /incorporated in the lease deed-that the Lessee shall pay /or/ reimburse to Lessor - the Service Tax on the Rent- in addition to payment of Monthly agreed Rent .
T. Kalaiselvan, Advocate
(Expert) 10 August 2014
The conditions stipulated in the lease/rental agreement will govern, so better draft the T & C accordingly.
