Entries from June 2008 ↓

Service tax on renting of immovable property

The activity of renting immovable properties for commercial use is taxable with effect from 1st June 2007.

What is Renting of immovable property

Renting of immovable property includes renting, letting, licensing or other similar arrangement of immovable property for use in the course of furtherance of business or commerce. “For the use of furtherance of business or commerce” includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple use buildings.

Who are liable to pay service tax

Every person who is providing taxable services for more than Rs.1,000,000 in any financial year (from 1st April to 31sty March) is liable for tax. As service tax is an indirect tax so payer can collect the tax from the service recipient. In case immovable property the owner is the service provider and tenant is a service recipient. If the service provider is located in India, he is the person responsible for paying the service tax, irrespective of whether he has collected the service tax from the receiver. However where the service provider is located outside India and the service receiver is located in India, then the service receiver will treated as the service provider and service receiver is the person liable for paying service tax.

Properties are not liable for service tax

i. Renting of immovable property by a religious body or to a religious body
ii. Renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching center.
iii. Land used for educational, sports, circus, entertainment and parking purpose and
iv. Building used solely for residential purpose and building used for accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities.

General exemptions

a) Services provided to the united nations or an international organisation declared by the central government
b) Services provided to a developer of Special Economic Zone (SEZ) or a unit of a Special Economic Zone which satisfy prescribed conditions.
c) Services provided for official use of a foreign diplomatic mission or consular post in India/ Service provided for personal use of family member of diplomatic agents or career consular officers posted in foreign diplomatic mission or consular posted in India.

Right to Information Act a tool against red-tapism

Suppose you have a pending work or a pending grievance in some government department. Whenever you went to their office, they would either not listen to you or they would not tell you the correct status of your application or they would raise some funny and irrelevant objection. They are basically expecting some bribe. If you pay the bribe, your job would be done but if you do not do that, they will keep on making you run around. In most such cases, a common man gives up and pays the bribe. But now, you need not pay bribe. You can use the Right to Information Law to get your work done. How to do that?

Just as an example, let us assume that you applied for a new water connection about a year back, but you have not been granted the connection. Fill up Form A prescribed under the Delhi Right to Information Act and seek information on the following lines:

I had applied for a new water connection about a year back, but have not received the same. Copy of the receipt of the same is enclosed for your reference. Please provide the following information with respect to the same:

  1. Please provide the daily progress report made on my application.
  2. Please give the names and designations of the officials with whom my application was lying during this period. Please intimate the periods when it was lying with which officer and what was the action taken by that official during that period.
  3. Please give the proof of receipt and dispatch of my application in the office of each of these officials.
  4. According to your rules, in how many days should anew water connection be granted. Please provide acopy of these rules.
  5. The above officials have not adhered to the time limit mentioned in these rules. Are these officials guilty of violating these rules and hence guilty of misconduct under their conduct rules. Please give acopy of their conduct rule, which they have violated by violating the above mentioned rule.
  6. These officials have caused serious mental injury to me by making me run around all this while. Are these officials guilty of causing mental harassment to the public?
  7. What action can be taken against these officials for violating all the above rules and the conduct rules? By when this action would be taken?
  8. By when would I be granted my water connection?

Normally, it becomes difficult for the officials to reply to these questions as this would bring their inefficiencies and lapses on record in writing. A reply to these questions also has the effect of fixing of responsibility.