Renting of Immovable Property–Declared Services

Renting has been defined in section 65B as “allowing, permitting or granting access, entry, occupation, usage or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property”

  • rent-immovable-propertyRenting means facility allowing, permitting or granting access, entry, occupation, use.
  • Such facility has to be in an immovable property, either wholly or partly.
  • Such facility may be provided with or without the transfer of possession or control
  • The same specifically includes letting, leasing, licensing or other similar arrangements in respect.

Renting under Negative list

Services provided by way of renting or leasing of following are covered by the negative list.

  • Renting of vacant land, with or without a structure incidental to its use, relating to
    agriculture.
  • renting of residential dwelling for use as residence
  • renting out of any property by the Reserve Bank of India
  • renting out of any property by a Government or a local authority to a non-business
    entity.

Exemptions in respect of renting of immovable property

  • Threshold level exemption up to Rs. 10 lakh.
  • Renting of precincts of a religious place meant for general public.
  • Renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a room below rupees one thousand per day or equivalent.
  • Renting to an exempt educational institution
  • What Renting of Immovable Property Charges Covers?

  • Renting for temporary purpose like marriages or other social functions because it includes renting without transfer of possession or control,
  • Permitting use of property for vending/dispensing machine
  • Allowing erection of tower
  • Renting for entertainment or sports
  • Renting of theatres by owners to film distributor

As per definition allowing or permitting usage of immovable property, without transferring possession of such property, is also renting of immoveable property.

Example activities and service tax chargeability

S.No Journey Taxability
1 Renting of property to an educational body

Exempted if provided to an educational institution for the purpose of education which is exempt from the levy of service tax; to others will be taxable.

2 Renting of vacant land for animal husbandry or floriculture Not chargeable to service tax as it is covered in the negative list entry relating to agriculture
3 Permitting use of immoveable property for placing vending/dispensing machines Chargeable to service tax as permitting usage of space is covered in the definition of renting
4 Allowing erection of a communication tower on a building for consideration Chargeable to service tax as permitting usage of space is covered in the definition of renting
5 Renting of land or building for entertainment or sports Chargeable to service tax as there is no specific exemption.
6 Renting of theatres by owners to film distributors (including under a profit-sharing arrangement) Chargeable to service tax as the arrangement amounts to renting of immovable property.

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