Payment of Service Tax on rent recovery., Service Tax

[Ashwin Garg]

Sir,

We are a manufacturer located in remote village and besides factory, residential colony is situated. All quaters, shops, offices, halls are constructed by company. We are recovering nominal rent as detailed below and it is shown as miscellaneous income in P and L :

a) Employees Quaters : Say ₹ 100 per month from salary

b) Workers Quaters : Say ₹ 50 per month from salary

c) Shops : Say Rs 1,100 per month

d) Mobile Tower rent towards open space : Say Rs 4,000 per month

e) Banks and ATM : Say ₹ 2,000 per month

f) Transporter Office : Say ₹ 1,000 per month

g) Community Hall towards facilities provided like light, cleaning charges.

Besides above we are also recovering electricity charges from above users which is supplied from our captive power plant and understand that no service tax is payable since electricity is "goods" and the charges are shown as miscellaneous income in P and L.

Querry :

a) on which of above activity we need to pay service tax

b) under which head we need to pay service tax

c) whether we need to pay service tax on electricity charges recovered

thanks in advance

ashwin

Posts / Replies

[Pradeep Khatri]

Dear Ashwin,

Except on activity no. a and b, you are under statutory obligation to charge service tax. Under Renting of immovable property you would charge service tax. Yes, you need to pay service tax on electricity generated via your captive power plant.

Regards

Neelam Taneja,(Executive Consultant)

YAGAY and SUN,

(Management, Business, and Indirect Tax Consultants)

[PAWAN KUMAR]

Dear Sir,

As per my view, no need to pay service tax on any activity.

The employees and others for which you are providing accommodation including electricity and other facilities and deducting an notional amount, The same is not in the nature of consideration under commercial activity, hence not liable for service tax.