Service tax on rental property is fully justified by Govt as the property rental whether vertically or horizontally are essential services in nature and rental income also is a very big source of income which should be taxed.
Finance Minister justified imposition of service tax on property rental income, meant for commercial use and maintained that dividend distribution tax (DDT) has been kept at marginal rate of 15% to give leverage for administrative expenses.
Likewise, DDT which has been raised from 12.5% to 15% should not be reviewed in different perspective because of the fact that the average corporate tax for approx. 30 lakh corporate under various slabs works out to be 17.3%, 17.9%, 18.5%, and 19.1%, Dr. Shome clarified. With an element of FBT and education cess, the effective corporate tax burden on industry works out to be around 21% against claim made by businessmen for 45%, he added.