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Increased rents on commercial property from today

Increased rents on commercial property from today
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First Published: Fri, Jun 01 2007. 02 33 PM IST
Updated: Fri, Jun 01 2007. 02 33 PM IST
New Delhi: Rent on commercial properties and cost of six services -- telecom, asset management, mining, oil and gas, works contract, development and supply of content -- will go up from 1 June as service tax introduced in this year’s budget comes into effect.
“The service tax of 12.36%, including 3% education cess, will apply on rents of all properties used for business and commerce with effect from 1 June ,” Atul Gupta, former chairman of North India Regional Council of Institute of Cost and Works Accountants of India, said.
The first instalment of service tax will have to be paid by 5 July.
Gupta said the service tax would not apply on rents of residential premises and properties rented for educational, agricultural and recreational purposes. However, composite properties used for residential as well as commercial purposes will fall within the ambit of the service tax, he added.
The impact of service tax “will be neutralised to some extent with the government allowing deduction of property tax from the rent for computing service tax,” said Diljeet Titus, senior partner of corporate law firm Titus and Co Advocates.
However, Titus said as the incidence of service tax would be passed on to the tenants, it could have implications on corporate bottom line, especially small and medium firms operating from rented premises.
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First Published: Fri, Jun 01 2007. 02 33 PM IST
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