Important Aspect in this negative entry is
(i) The Service should be of renting –
(ii) Renting should of Residential Dwelling –
(iii) Residential Dwelling shall be used as Residence
1.What is a ‘residential dwelling’?
The phrase ‘residential dwelling’ has not been defined in the Act. It has therefore to be interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include –
I. Hotel,
II. Motel,
III. Inn,
IV. Guest House,
V. Camp-site,
VI. Lodge,
VII. Houseboat,
or like places meant for Temporary stay.
2. Would the nature of renting transactions explained in column 1 of the table below be covered in this negative list entry?
1 |
2 |
If….. |
Then…… |
(i) a residential house taken on rent is used only or predominantly for commercial or non-residential use. |
The renting transaction is not covered in this negative list entry. Hence would be covered under Service Tax |
(ii) if a house is given on rent and the same is used as a hotel or a lodge |
The renting transaction is not covered in this negative list entry because the person taking it on rent is using it for a commercial purpose. |
(iii) rooms in a hotel or a lodge are let out whether or not for temporary stay |
The renting transaction is not covered in this negative list entry because a hotel or a lodge is not a residential dwelling. |
(iv) government department allots houses to its employees and charges a license fee |
Such service would be covered in the negative list entry relating to services provided by government and hence non- taxable. |
(v) furnished flats given on rent for temporary stay (a few days) |
such renting as residential dwelling for the bonafide use of a person or his family for a reasonable period shall be residential use.
But if the same is given for a short stay for different persons over a period of time the same would be liable to tax.
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