Apr. 24 – The Delhi High Court has announced that it would abolish service tax on commercial rentals, cutting central government earnings by Rs 8,000 crore annually.

The regulation will help realtors, specially companies like retailers and call centers. Ernst & Young associate director Bipin Sapra told The Economic Times: “The high court order is a welcome one for the business and shall reduce the input costs in these tough times.”

The court says that renting of immovable property for use in the course or expansion of business is not regarded as a service, thus cannot be taxed in the first place.

According to The Economic Times, for 2009-10, the government expects to collect Rs 68,900 crore through service tax, levied at a rate of 10 percent.

Service tax is defined as tax on value addition provided by some service providers.