QUESTION

One of my Client had Commission Income from Bajaj Allianz General Insurance about rs 3100000 and about 1500000 from LIC of India during FY 2015-16, 2016-17 and he has also Rent income of Commercial Property. He had not register with Service Tax. Now he gets notice from Service Tax Department, Does he is liable for Service tax on Rent ?

ANSWER

Facts of the case: Mr A had Commission Income from Bajaj Allianz General Insurance about Rs 31,00,000/- and about Rs 15,00,000/- from LIC of India during FY 2015-16, 2016-17 and also Rent income from Commercial Property. He was not registered with Service Tax. Now he gets notice from Service Tax Department, Does he is liable for Service tax on Rent ?

Law Applicable: Notification No. 33/2012-ST

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Finance Act), and in supersession of the Government of India in the Ministry of Finance (Department of Revenue) notification No. 6/2005-Service Tax, dated the 1st March, 2005, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. number 140(E), dated the 1st March, 2005, except as respects things done or omitted to be done before such supersession, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the said Finance Act

Interpretation: Central Government has exempted taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the said Finance Act.

Threshold exemption to the service tax allows an exemption to the taxable supply without adding the exempted services. Therefore if value of only taxable services did not exceed 10 lakh rupees in a FY, then you are eligible for SSI exemption and not required to pay service tax.

Conclusion: If the value of taxable services is less than 10 lakh rupees in a FY then you are exempt from service tax and not required to pay service tax on rent. (Reply dt. 27/01/2021)