Case Law Details
In re Elambrancheri Khaldoon (GST AAR Kerala)
i) Small business exemption provided u/s 22 of GST Act is eligible to co-owners separately in the case of jointly owned property, where the rent is collected together but divided equally and transferred to the respective co-owners. ii) Engaging a co-owner to collect and distributing rent among all the owners for administrative convenience has no implication on the business exemption u/s 22 of the GST Act for individual co-owners.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KERALA
The petitioner is one of the co-owners of a jointly owned immovable property. There are 13 co-owners holding equal share in 86.78 Cents of land and building. They have rented out these properties to different parties. Total rent from all these properties exceed twenty lakh rupees in a financial year. But, individual share is not exceeding the said threshold. Now, the owners are planning to engage one of the co-owners to collect rent and distribute among them for the purpose of administrative convenience through execution of a power of attorney . In the circumstances, an advance ruling is sought in respect of the following:-
i) Whether small business exemption under Section 22 of the GST Act is available to all owners separately in case of jointly owned property.
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The situation also does not cover in case of co-owners have definate shares but unequal shares. Say A has 50% B,C,D, E have 12.5% share. Suppose 60 lakh rent is received in joint account then what is impication ? A has exceeded 20 lakhs limit but the others have not . Whether total of all 5 have to be considered for limit ? Since one rent receipt is received how do you pay GST if A is liable ?
The author wold have discussed a situation where one of the co-owner is having rental income exceeding Rs20Lakhs and to charge GST from the tenant only on his portion for better clarity to the readers.