G.O.(Ms) No.196, Collection of Service Tax for Government Lands Leased for Commercial Purpose, 2019
The Revenue & Disaster Management Department, Land Disposal Wing, issued Government Order (Ms) No. 196 on 28 June 2019, directing the collection of service tax from business entities leasing government land for commercial purposes. The service tax must be collected from the lessee receiving the lease service, and the Additional Chief Secretary and Commissioner of Land Administration must instruct all District Collectors to take follow up action.
What the government order does
Government Order (Ms) No. 196, issued by the Revenue & Disaster Management Department, Land Disposal Wing, on 28 June 2019, establishes that service tax must be collected when government land is leased to a business entity for a commercial purpose. The tax is to be recovered from the business entity receiving the lease service and remitted to the Service Tax Department.
The decision applies to all lessees holding government land on lease for commercial purposes. Cosmopolitan Club and Tamil Nadu Golf Federation are identified as examples of business entities from which service tax was considered recoverable.
Why service tax was considered payable
The Advocate General of Tamil Nadu agreed with the Commissioner of Service Tax that renting government immovable property to business entities was a taxable support service. The opinion stated that support services provided by the Government were outside the negative list and that support service included renting immovable property.
The Government accepted this opinion and decided that service tax should be collected for the relevant period from business entities leasing government land for commercial purposes.
Who is affected
Government Order (Ms) No. 196 affects:
- Business entities that lease government land for commercial purposes.
- Existing commercial lessees of government land from whom service tax for the relevant period may need to be collected.
- District Collectors responsible for following up on collection.
- The Additional Chief Secretary and Commissioner of Land Administration, who must issue suitable instructions to all District Collectors.
Key provisions
- Service tax is to be collected whenever government land is leased to a business entity.
- The business entity receiving the lease service must bear the service tax.
- The decision covers all lessees holding government land for commercial purposes.
- The source records that government land within Municipal and Corporation limits was leased at 7 per cent of land cost, including additional surcharge, for non commercial purposes, and 14 per cent for commercial purposes.
- Government Order (Ms) No. 196 does not state the applicable service tax rate or calculate the amount payable by an individual lessee.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
Does this apply to every commercial lessee of Tamil Nadu government land?
Yes. Government Order (Ms) No. 196 states that service tax is leviable and must be collected from all lessees holding government land on lease for commercial purposes.
Who must pay the service tax on a commercial government land lease?
The business entity receiving the lease service must pay it. The Government is to collect the tax from the lessee and remit it to the Service Tax Department.
Does the government order specify the service tax rate?
No. Government Order (Ms) No. 196 directs collection of service tax but does not state the applicable service tax rate.
Who will take action to collect the service tax?
The Additional Chief Secretary and Commissioner of Land Administration must issue suitable instructions to all District Collectors for necessary follow up action.
