Taxability of Rent under GST

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Taxability of Rent under GST

In this article, I will explain all tax provision applicable to rent. There are 4 rates prevailing in GST, but on rent services GST will be applicable at rate of 18%. It is always said that half knowledge is always dangerous. Hence just don’t charged GST on rent at specified rates. Firstly it needs to be understood that, on which transactions of rent GST should be charged? Which tax should be charged i.e. either CGST & SGST or Simply IGST?

 

Following are the cases on which no GST would be attracted:

  • Renting of Residential dwelling:

As per Notification No. 12/2017, rent paid on renting of residential dwelling unit for use as Residence is exempted from the levy of GST. It may be noted that, the ultimate purpose should be use as Residence. If it purpose is changed means if it given for commercial or official purpose then such transaction will definitely attracted under GST even though it is a residential dwelling.

 

  • Turnover is within the specified limit:

If income from renting of services & goods supplied is below the 20 lakhs then in such case landlord is not required to take registration under GST Act. And also landlord is not required to charge GST on such case. Hence while paying the rent by the recipient to the landlord ensure that, GST No. should be provided to the landlord if he charged GST, for the purpose of availing credit on it.

 

  • Rent received by Charitable Trust:

If a charitable trust or religious trust receives rent which is owned & managed such place meant for public &

  • rent of room is below the Rs. 1000 or less per day
  • rent on shops & other spaces for business are charged Rs. 10000 or less per month
  • rent on community halls or open area is charged Rs. 10000 or less per day

then no GST will be attracted. If the rent is above the specified limit then GST is required to be charged.

     

 

 What is Turnover in GST?

For the purpose of turnover calculation you have to  added 1) total rent received from all properties +2)total value of services provided +3) total value of goods supplied(if any  from his business) should be less than 20 lakhs then landlord is neither required to take registration nor charged GST if any. Except in some states the limit is 10 lakhs for taking registration.

 

Place of Supply:

For the purpose of GST levied one should know what should be charged either CGST & SGST or IGST, for this purpose one should know where is the place of supply of such transaction.

Place of Supply in case of immovable property is always the location of the property.

 

 Following are the various cases:

Case – 1  Landlord + Tenant+ Property are in the same state

In this case, it is intra state transaction & both CGST & SGST would be levied.

Case – 2  Landlord + Property is in same state but Tenant is another state.

In this case also, it is intra state transaction even though tenant is in another state. CGST & SGST would be levied.

Case – 3 Landlord registered in different state & property is in another state:

In this case, IGST would be levied as the place of supply falls in different state, irrespective of the registration of tenant.

 

Note: It is not necessary for the landlord to take the registration in same state in which property is registered. He can take the registration in another state also.

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