Defining the Supply Areas for the Services Offered At Immovable Properties

By Registrationwala

27th April 2017


In the latest update on tax regime, the tax services that are offered to an immovable property are now supposed to pay the service tax. The service tax is applied to anything and everything that comes to the state or to a different state. The immovable properties are nothing but referred to the immovable objects or a property item that cannot be shifted or moved without actually ruining or wrecking it completely.

It is fixed to the surface of the earth, such as a house or a building. In the Goods and Service Tax (GST) regime, it is quite essential to subject whether the supply is made in an intrastate or interstate manner to find out the applicable tax on the supply. This can be confirmed by finding the place of supply. The place of supply for the services that are offered to an immovable property will be the area at which the immovable object or property I situated to intended to be situated.

There Can Generally Be Four Summaries Regarding This Topic

  • The services that are offered are directly related to an immobile property.
  • Boarding in an immovable property.
  • Accommodation in the immovable property for organizing an event.
  • Any such services that is additional to the above-mentioned services.

Services That Are Offered Are Related To an Immovable Property

This includes the services offered by the interior decorators, surveyors, architects, engineers, etc.

For example: Suppose a 5-star hotel owner from Shimla is thinking of constructing a hotel in another state, Dehradun. The hotel’s interior decoration is being handled by some popular interior may be raj interiors, who has the registered place of business in Dehradun.

For the supply of materials for servicing the interior decoration,

Location of the supplier: Dehradun.

Place of supply: the place of supply will be the location of the hotel, that is, Dehradun.

This type of service is an intrastate supply and the taxes that should be applied are CGST and SGST.

Boarding In an Immovable Property

This service includes accommodation offered by a hotel, lodge, guest house, home stay, club, campsite, house boat, motel, etc.

For example: If the 5-star hotel owner provides lodging to Mr. Jones, who is a registered dealer in Jaipur, for a seminar.

Location of the supplier: Shimla

The place of supply: Shimla.

This type of service is an intrastate supply and the type of taxes applicable for this service is SGST and CGST.

Any Such Services Those Are Additional To the Above-Mentioned Services

For example: the Rajrani Automobiles Pvt. Ltd, from Gurgaon, along with booking the conference hall of a renowned 5-star hotel in Shimla, also orders for food and beverages service for their guests for the official conference that is going to be conducted.

Location of the supplier: Shimla.

Place of the supply: Shimla.

This type of supply is called as intrastate supply and the taxes that are applicable on these services are CGST and SGST.

Lodging In the Immovable Property for Managing an Event

This supply of service includes accommodation for managing and organizing any kind of official, cultural, social, religious, private, or business function.

For example: Rajrani automobiles Pvt Ltd, who is a registered automobile dealer from Gurgaon, tries to book the conference hall of a renowned 5-star hotel in Shimla, for approximately 3 days for conducting the conference.

The supplier location: Shimla.

The place to supply: Shimla.

This type of service is an intrastate supply and the types of taxes that should be applicable are CGST and SGST.

In the latest tax regime, the service tax is imposed upon the services offered in relation to the immovable or fixed properties. Because the service tax is a central levy; the input credit on the services received could be applied against the liability of the provided services; irrespective of which state it belongs to.

Taking the above example into consideration, according to the current rule, Rajrani Automobiles Pvt Ltd from Gurgaon can take the credit input of the tax paid on the hotel charges in Shimla.

Although in the GST era, the place of supply of services offered to the immovable properties is the location of the fixed property. This signifies that in these conditions, the applicable tax will be SGST and CGST.

The CGST and SGST credit of a particular state cannot be used to start the liability of another respective state. In such types of cases, when a registered individual takes the services into a different state, the individual will not be able to take the credit input on the service that has been taken from another state. In this situation, the Rajrani Automobiles Pvt Ltd, from Gurgaon cannot take the credit input of the CGST and SGST that is paid in Shimla.


Defining the Supply Areas for the Services Offered At Immovable Properties