Clarification on Payment of Service Tax on rent payable by Central/State Government Departments

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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.