GST Registration Is Required By Landlord Renting Out Residential Properties or Not

The article ‘GST REGISTRATION IS REQUIRED BY THE LANDLORD RENTING OUT RESIDENTIAL PROPERTIES OR NOT’ is clarifying about liability of registration in the case of residential property is rented out to the registered person from 18-07-2022. I hope the readers will be benefitted. I request to publish it in your august site.

The case of landlord is that his tenants are mixed i.e. registered and unregistered under the GST Law. The total receipts (turnover) Rs.22 lakh was happened till 17-07-2022. The sum of Rs. 8 lakh were received from the registered tenants and balance Rs.14 lakh were received from unregistered tenants.

The query is that whether he is required to be registered under the GST or not on the basis of supplies being done by him.

From 18-07-2022 residential dwelling rented to a registered person is taxable service. The tax on this account shall be paid by the tenant on reverse charge basis.

From 18-07-2022 rate of tax for “renting of residential dwelling” 

As per annexure issued on 28-06-2017 for “Scheme of Classification of Services” – Group 99721 in regard to “Real estate services involving owned or leased property” is covering as under:

Now, It is clear that Services by way of renting of residence dwelling is taxable services if it is not provided to the unregistered person.

Tax on this account if it is rented out to any registered person, shall be paid by such registered person on the basis of reverse charge with effect from 18-07-2022.

Entry in this regard is Entry 5AA of the Notification No.13/2017 amended by Notification No.Notification No.05/2022 – Central Tax(Rate), dated: 13.07.202205/2022 – Central Tax(Rate)

Conclusion – Whether registration is required or not by the landlord person if turnover as on 17-07-2022 was Rs.22 lakh. Rs.8 lakh received from the tenants registered under the GST and balance Rs.14 lakh received from the unregistered persons.

Section 23 CGST – Persons not liable for registration

1. If it is the case of exclusive supply of goods or services or both which are exempt from tax.

2. If the person has been exempted from registration by notification.

The case in hand is analyzed as under:

Supply made to unregistered tenants shall be covered as that the person is doing supply of service which is exempted from tax.

Liability of Tax when supply made to the registered tenants – Liability to make payment of tax on this account shall be of the registered tenant on the basis of reverse charge.

Notification 5/2017 – Central Tax issued on 19-06-2017 states that the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the said Act as the category of persons exempted from obtaining registration under the aforesaid Act.

Thus, the landlord person is doing exclusive supply of service being exempted from tax and doing supply of service on which tax shall be paid by the recipient on the basis of reverse charge.

On the basis of section 23 CGST it is safely concluded that a person if he is doing exclusive supply of service of renting of residence dwelling to any one i.e. a person registered under the GST and/or an unregistered person, shall not be liable for registration under the GST Law.

To reach to me for any suggestions, rectifications, amendments and/or further clarifications in regard of this article my email address is pkmgstupdate@gmail.com.