Advocate Santosh Kumar

27th November, 2012 is Last Date of Payment of Arrear (Due) of Service Tax on Renting of Immovable Property without Penalty.

If you have put your immovable property on rent for use in furtherance of business or commerce and annual rent amount, alone or with the amount of other taxable services, exceeds Rs. 10 lacs and further, you have any service tax amount related to such renting due since 1st June, 2007, you have an opportunity to pay such due with interest before 27th November, 2012 and department would not ask for penalty.   

Background :[ ERA of Confusion and Litigation]

Renting of immovable property services have been brought under the service tax net by the Finance Act, 2007 w.e.f. 1st June, 2007.  This move of government was questioned in all forums including Court of Laws (Supreme Court and various High Courts) on the basis of the power of the Union of India to levy the same. Some decisions of courts and a number of articles published in pros and cons of the leviability not only confused almost  entire assessees but also to the Government. The Government once again in 2010 vide the Finance Act, 2010, amended the definition of renting of immovable property given in sub-clause (zzzz) of Section 65(105) with retrospective effect. This act of the Government further invited to litigations and evoked confusion and resulted in low deposition of service tax amount. The Department was not in position to justify that low or non-deposition of service tax by Assessees was due to malafide intention or they were suppressing the facts etc.

Penalty Waiver Scheme

Almost Five long year of litigation produced some result in government’s favour and this gave them confidence for imposing service tax and recover them without being questioned.

In the Budget Memorandum of 2012 finance minister said that Constitutional validity of the levy of service tax on renting of immovable property has been the subject matter of litigation leading to pronouncement of court judgments favorable to revenue, including those of Honourable Delhi High Court and Honourable Supreme Court. Taking an overall view, the Government has decided to waive the penalty for those taxpayers who pay the service tax due on the renting of immovable property service (as on 06.03.2012), in full along with interest. For this purpose, a new section 80A [Section 80(2) in the Act] is being inserted in the Finance Act, 1994. This scheme of penalty waiver will be open only for a period of six months from the date of enactment of the Finance Bill, 2012.

The Provision of Section 80(2) is as follow:

“Notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub-clause (zzzz) of clause (105) of section 65, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President “.

Since the Finance Bill was enacted on 28th May 2012, therefore, the scheme is open till 27th of November 2012.


Author – Santosh Kumar (Advocate)

WZ-64A, Mukherjee Park , Tilak Nagar,

New Delhi- 110018.



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  1. Surya says:

    Dear Sir,

    one of our client(Individual) had received an average rent of Rs. 25,00,000/-(25lakh)per annum for last 3years, on commercial property. what is service tax liability and whether he can go for Valuntory Disclosure Scheme.
    please suggest me.

  2. SUNIL says:

    Dear Sir, We have not paid service tax on renting the property for the f y 08-09,09-10, 10-11 what is our liabity for service tax now.

  3. BHASKARAN. A says:

    What is the interest & penalty portion which receive rental from commercial
    during the period of April-12 to Dec-12. I want to remit tax alone? or if impose
    any penaly and interest will attract. Kindly reply.

    bhaskaran a

  4. HARISH KATIRA says:

    will anyone please clarify as to who is responsible to pay this service tax on renting of residential and commercial premises ? if so, at what rate ? is there any exemption limit allowed ?

  5. sean ahner says:

    Thanks for posting! I think the department was not in position to justify that low or non-deposition of service tax by Assessees was due to malafide intention or they were suppressing the facts etc.

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