Service Tax on Renting of Immovable Property

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 22, 2008 --

The prices of immovable properties have shot up over the last five years. There is also a sharp rise in the rents of immovable properties simultaneously. With the arrival of MNCs and a revolution in the work culture due to the computerization has increased the demand for well-furnished properties in the country. This trend has drawn the attention of Indian Finance Ministry too. With an aim to broaden the Service tax base, the Finance Ministry, in Budget 2007, proposed to cover several new services under the umbrella of service tax net, and “Renting of Immovable Property” is one of those. The Department intends to gain significant tax revenue from this new service sector. The activity of renting immovable properties for commercial use is taxable with effect from 1st June 2007.

What is Immovable Property?
According to the definition, in all the civil law systems, immovable property is the equivalent of "real property" in common law systems, i.e. it is a piece of a land or any permanent feature or structure above or below the surface. Immovable properties include premises and property rights, houses, land and associated goods and chattels. Immovable properties are located in and always have a fixed address.

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Nimisha Sinha

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