CA C.P.Ethirajan

As per schedule I supply of service without consideration to related/ distinct person will be treated as supply. Admitting a person into a premises for “consideration” alone can be treated as business under Sec 2(17)(f).  It is not clear whether schedule I can override section 2(17)(f).

As per Section 9(4), the registered taxable person, who receives goods or service from unregistered person, the receiver, will have to discharge the tax liability. Strangely, the word service or good “received in the course or furtherance of business” is not used in this section.

This leads us to conclude that an individual paying tax on renting of immovable property has to pay tax under RCM on all goods and service received by him from unregistered even for personal use. Unfortunately no input tax is available on such tax. This not only puts a burden on inflow but the said individual has to prepare self invoice and also file return for the same. To avoid the hazels, he may have to deal with register persons only, but still has to upload such transaction in his monthly return without claiming input tax credit.

 Let us take the case of a small trader (proprietor) or an individual having taxable rental income but whose turnover is below 20 lakhs

He need not get himself registered under GST. Assuming such person pays some legal fees to advocate, and then he has to get himself registered for purpose of paying GST under RCM even though his turnover is below threshold limit, his is as per section 9(5) of CGST Act. Once he becomes a “registered person” under GST, the provisions section 9(4) is also attracted, which means he has to pay tax under RCM ON ALL goods/ service received from a unregistered persons resulting in undue hardship in payment of tax under RCM (with no ITC) and also need to generate self invoice and upload the same in monthly return.

An individual may be residing in one state and having immovable property in another state. Controversy has already started whether he has to pay IGST or CGST in the state where property is located.

To conclude, it will be better if clarification is given by CBEC above points.

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13 responses to “Hidden problem for renting of immovable property service provided by individuals under GST”

  1. R.PALANIVELU says:

    SIR PLS GIVE CLARIFICATION FOR GST PAYMENT BY HIGHER SECONDARY SCHOOLS RUN BY CHARITABLE TRUSTS(NON-GOVT) FOR FEES RECEIVED FOR HOSTEL/MESS/SUPPLY OF CONSUMABLES LIKE STATIONARIES ETC OTHER THAN TUTITION FEES. CA. R.PALANIVELU

  2. faisal rahman says:

    gst on renting and removable property invoice format how to i get him,,,, pls shall the problem

  3. faisal rahman says:

    gst on rending and immovable property invoice format how to i get pls shall the problem

  4. ravindra tiwari says:

    I have bought fully constructed apartment in 2016. Payment schedule given by builder was

    50 % on Flat hand over – already paid – possession taken on November 2016
    25 % after one year of flat hand over – i.e. November 2017
    25% after two year of flat hand over – i.e. November 2018

    Builder called me that I have to pay GST for remaining amount (25% – due on nov 2017 +25% due on nov 2018 )

    But as I understand that fully constructed (before July 2017) flats/Apartment are kept out of GST.

    Please guide me on this.

  5. rajan0002002@gmail.com says:

    Rental Income from Immovable Property which HS code should be selected for gst Registration. Please Tell.

  6. RAJAN KAKKAR says:

    WHAT IS HS CODE FOR SERVICES IN RENTING OF IMMOVABLE PROPERTY SERVICE FOR REGISTRATION IN GST.

  7. gulab says:

    Rent from house property 30000/- per month
    Would gst would be levied on tenant or owner
    Owner is unregistered dealer and tenant is also an unregistered dealer

  8. P K Jhusingka says:

    Suppose we have a Leased Building and has been rented out to both Commercial purpose and Residential Purpose and the total income from rent is more than 20 lakh. So, what is the rate of GST on that and how do we register our company as New registration.

  9. Yuvaraj says:

    WE LETOUT OUR COMMERCAIL PROPERTY to private limited company (Building of Garment manufacturing unit) BELONG TO CO-OWNERS AND MONTHLY RENTAL INCOME FOR THE PROPERTY IS 105000 PER PERSON..
    BUILDING BELONG TO 2 PERSON…
    SO TOTAL RENT PER MONTH 210000. (105000 EACH)…
    Is GST apply for this transaction or not….
    Is exemption under the category of below 2000000 per year…

  10. Mohan Sunderam says:

    we have rented our property to PNB. Yearly rent received is less than 20 lacs. Earlier, we were paying service tax as the rent received is more than 10 lacs. what would be the status under GST ? please explain and oblige.

  11. Mathew John says:

    For Section 9(4) to apply the service has to be taxable. Taxability is determined by provisions in section 7 and section 9(1), So the fact that the words “in the course of furtherance of business” is missing from section 9(4) may not have any significance. section 9(4) applies only if the service is taxable.

  12. Ritesh Mittal says:

    Service Tax Exemptions has been continued in GST as decided by GST Council.

    In S.No 7 – Services by way of renting of residential dwelling for use as residence are Exempted

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