Analysis of Entry (m): Services by way of renting of residential dwelling for use as residence in negative list :
The above entry covers services –
- by way of renting
- of a residential dwelling
- for use as residence
1. Renting means allowing, permitting or granting access, entry, occupation, use 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 [Section 65B(41)].
2. 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 hotel, motel, inn, guest house, camp– site, lodge, house boat, or like places meant for temporary stay.
Renting of a residential dwelling which is for use partly as a residence and partly for non residential purpose like an office of a lawyer or the clinic of a doctor would also be a case of bundled services as renting service is being provided both for residential use and for non residential use. Taxability of such bundled services has to be determined in terms of t he principles laid down in section 66F of the Act.
Whether the following renting transactions are included in the negative entry?
1. Residential house taken on rent used only or predominantly for commercial or nonresidential use: The said renting transaction is not covered in this negative list entry.
2. House given on rent and the same being used as a hotel or a lodge: The said renting transaction is not covered in this negative list entry because the person taking it on rent is using it for a commercial purpose.
3. Rooms in a hotel or a lodge let out whether or not for temporary stay: The said renting transaction is not covered in this negative list entry because a hotel or a lodge is not a residential dwelling.
4. Houses allotted by Government department to its employees and a license fee is charged for the same: Such service would be covered in the negative list entry relating to services provided by Government and hence non- taxable.
5. 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.