With the new service tax introduced by the government in the last budget coming into force, commercial property rates have gone up from 1st June.

The 12.6% service tax, including the 3% education cess applies to all rents on commercial properties .

Telecom services, asset management, design services, gas and oil drilling and works contract, and development and supply of content will also attract the service tax, the first instalment of which is to be made by July 5.

The tax does not apply to residential properties and properties rented out to educational, recreational and agricultural purposes.

However, mixed use properties would be subject to tax, as per the new regulation.

The impact of the tax would be counterbalanced by the deduction of property tax from the rent, though tenants would be adversely affected.

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