delhi hc ruling regarding service tax on rent


 

Dear Members, the Delhi HC (News article submitted below) has ruled that commercial renting of premises will not attract service tax.  As the Delhi Govt proposed to go for appeal, the outcome can be posted herein for information to all of us.  Tks.


SERVICE TAX RELIEF ON COMMERCIAL RENTING OF PREMISES

THE Delhi High Court has ruled that commercial renting of premises will not attract service tax, in a move that will cheer India Inc fighting a slowdown but leave the central government about Rs 8,000 crore poorer every year.

The Centre will challenge the order in the Supreme Court, said a government official who did not wish to be identified.

 

Renting of immovable property for use in the course or furtherance of business cannot be regarded a service, and, therefore, can?t be taxed, the court ruled while disposing of petitions by retailers such as Lifestyle, Shopper's Stop Home Solution and Barista Coffee.

 

The order comes as a major relief to realtors and all companies operating from rented space, particularly retailers and call centres. "The high court order is a welcome one for the business and shall reduce the input costs in these tough times," Ernst & Young associate director Bipin Sapra said.

 

It also means a major revenue loss for the government, which collects over Rs 8,000 crore annually as tax on renting services, or more than one-tenth of its service tax net.

 
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