The Finance Bill, 2007 proposes to impose service tax on renting of immovable property for use in the course or furtherance of business.

Section 65(90a) covers ``letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce''.

This provision excludes the renting of immovable property by a religious body or to a religious body and renting of immovable property to an educational body other than a commercial training or coaching centre.

An explanation to the provision elaborates that use in the course or furtherance of business or commerce would include use as factories, office buildings, warehouses, theatres, exhibition halls and multiple use buildings. Section 65(105) (zzzz) provides that the tax is on the renting of immovable property by any person to any other person for use in the course or furtherance of business or commerce.

Immovable property includes building, part, appurtenant land, land incidental to the use of the building, common areas and facilities, common areas within a complex. It does not include vacant land used for agriculture, aquaculture, farming, forestry, animal husbandry, mining, vacant land in general, land used for parking, educational, sports, circus, entertainment purposes and building used solely for residential purposes and building used for purpose of accommodation including hotel, hostel, boarding houses, holiday accommodation, and tents.

Commercial property rents are significantly high and the real-estate boom, coupled with the non-availability of commercial space, have resulted in the rentals reaching dizzy heights. There are companies which have a rental bill of more than Rs 10 crore. Service tax shall be an additional burden.
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