1. Introduction :-
According to the GST Act, renting or leasing out an immovable property would be treated as a supply of services as per section 7 of the CGST Act, 2017.
- From October 1, 2024 onwards if an unregistered landlord renting out commercial property to a registered tenant, the Reverse Charge Mechanism (RCM) applies, where the tenant must pay the GST.
- For residential properties, prior to July 18, 2022, renting for residential purposes was GST-exempt. Now, if a registered person rents a residential property for personal use, GST is applicable under RCM, making the tenant responsible for paying the tax. GST is not levied if the property is rented to an unregistered person for residential purposes or if a registered person uses it for their own residence.
2. Exemption of GST levied on renting of immovable property :-
As per Entry No. 12 of Notification No. 12/2017-Central Tax(Rate) dated 28-06-2017, Services by way of renting of residential dwelling for use as residence 87[except where the residential dwelling is rented to a registered person].
For the purpose of exemption under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, –
- The registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence and Such renting is on his own account and not that of the proprietorship concern.]
- Renting of property by charitable or religious institutions for certain purposes.
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