Budget 2012: Withdraw service tax on retail rentals, says DTZ

Service tax on rentals will result in further increase in net retail rentals, impacting both the retailers as well as developers.

By Agencies | Updated: Feb 11, 2012, 03.59 PM IST

NEW DELHI: Commercial rental, which is a cost to the retailer, was brought in the ambit of Service tax in the 2007-08 budgets. Retailers had challenged this levy in high courts but failed to secure a relief. If implemented, this additional levy will put huge burden on the retail segment, which is already operating with low margins.

Suggestion:

Service tax on rentals will result in further increase in net retail rentals, impacting both the retailers as well as developers. Additionally, retailers would be forced to pass on the service tax burden to customers. This will result in higher cost of goods. Also considering that rentals are cost incurred by the retailer, the same should be withdrawn.

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