Trade Notice No. 47/ST/2012, dated 31-10-2012

It is to bring to the notice of all trade associations and stake holders that Clarification has been sought whether Service Tax is payable on rent paid by them to various building owners who has given the buildings on rent to Govt. Departments for office purpose.

2. In this connection it is clarified that w.e.f. 1-7-2012, Service Tax is payable by landlords/property owners on rent received by them for buildings given on rent to such organizations like State Govt./Central Govt. Offices, even though the said organizations are non-commercial organizations. This clarification is based on legal provisions that Section 66D of the Finance Act, 1994 (Negative List) as well as Notification 25/2012-Service Tax, dated 20-6-2012, do not provide any exemption for such activities. Hence Service Tax is payable on rent paid by Central Govt./State Govt./Local Authorities for office buildings taken by them on rent.

3. All the trade associations are requested to give wide publicity to the contents of this Trade Notice amongst their member & constitutes.

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0 responses to “Clarification on Payment of Service Tax on rent payable by Central/State Government Departments”

  1. KJ Joy says:

    Sir,

    Please clarify, if a Central Govt. Deptt. has hired building from private parties and paying rent to them, who will pay the Service Tax on the rent amount, the owner of the building or the Govt. Deptt.

    Waiting for reply,

    Thanking you,

  2. DINESH says:

    SIR I CANNOT FIND THE ORGINAL GOVERNMENT ORDER FOR THE TRADE NOTICE 47/ST/2012 DTD 31-10-2012 IN SERVICE TAX WEBSITE, CAN YOU SEND THE ORGINAL CIRCULAR TO MY EMAIL ID

  3. akshay says:

    what would be the situation wen the rent is payable to governemt for yearly lease payment to govt department

  4. KN.Muthiah says:

    Dear Sir,
    The notification says that with effect from 1-7-2012,the Service Tax on rent on properties leased to Govt.organizations whether commercial or non-commercial have to be collected and paid by the Building Owner.
    Does it mean that prior to 1-7-2012,renting to these Government Organizations does not impose the burden of charging,collecting and remitting Service Tax on the Building Owner.

  5. M.Ramanathan says:

    Dear Sir,
    Landlord is at the mercy of the tenents.In most cases Tenents do not pay rent itself regularly.In this scenario the Landlord is to collect Service Tax from them and remit to the Government.
    If the Landlord wants posession of the property,the tenents normally do not vacate.They demand Goodwill etc. All these issues are because of our faulty Legal System.If the Landlord goes to court to vacate,he has to fight for atleast 20 years to get posession of the property.Once the Landlord goes to court,the tenent will not even pay the rent.What the Landlord can do.Poor Landlord has to sell the property for a lesser value.In the present scenario,only people with muscle to fight alone can lease any property.It is unfortunate that even sophisticated and bigger corporate tenents also take advantage of the Rent Control Act and do not abide by the terms of the lease.
    Till Rent Control Act is repealed,the Service Tax on Renting shall be imposed on the TENENT.All so called Land lords(Poor People)have to take up this issue.If any Good person in Powerful position see this comment let him also help us.

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