Today I am going to discuss 9 important points to know about GST on Renting of Immovable Property.

1. GST on Rent is taxed @ 18% of the Rent paid. This GST would be CGST @9% and SGST @ 9% in case the landlord is registered in the same state. In case the landlord is registered in a different state, IGST @ 18% would be levied.

2. The landlord will be exempt from taking registration under GST if the aggregate turnover of supply of goods or services or both during the year is less than Rs. 20 lakhs during the financial year.

3. GST on Renting of Immovable Property will be classified as Supply of Service under Schedule II.

Classic house model for rent on background

4. The government has exempted by notification rent of immovable Property of following

  • Renting of Residential Dwelling used for residential Purpose
  • Renting of Hotel, Inn, Guest House, Club or Composite for the residential and lodging purpose having a value of Supply of a Unit Less than or equal to 1000 per day

5. Renting of Precincts of a religious place meant for general public-owned and managed by an entity registered as a charitable or religious trust.

Exceptions

  • Rent of Room where rent is more than Rs. 1000 per day
  • Renting of Premises or community halls or open areas and like where rent is more than Rs. 10000 per day
  • Renting of Shops or other spaces for business or commerce where rent is more than Rs. 10000 per day

6. Rest all the renting income relating to immovable property is taxable under GST. Eg commercial renting

7. The tenant who is paying the GST to the landlord can claim the benefit of Input Tax Credit.

8. The landlord would be required to file GST Returns and deposit the GST collected with the Govt. based on the GST Return filing schedule.

9. If service supplied of renting of immovable property by CG/SG/UT to any registered person under GST then in that case reverse charge will be applicable i.e., Registered Person in Taxable Territory is liable to pay tax.

FAQ: What about renting PG along with food services?

Ans: No GST will be attracted in case of renting for residential dwelling for use of Residence.

As per our understanding of the term ‘residential dwelling,’ it can be said that a residential house even if used for providing PG services qualifies to be a residential dwelling.

Even if a lump sum amount is being charged the service of food, parking or other ancillary services are supplied in conjunction with the accommodation service.

Such supply would be ‘composite supply’ and the principal supply in such a case would be “accommodation services”.

As per the provisions of composite supply GST rate on composite supply will be equal to the GST rate applicable to the principal supply of such goods and services.

Hence, a composite supply of PG services would be exempt from the levy of GST.

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Qualification: Student - CA/CS/CMA
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Location: New Delhi, IN
Member Since: 26 Dec 2019 | Total Posts: 4

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5 Comments

  1. Naren says:

    My wife owns Commercial Property(Office).She is charging by way of Rent to two of my sons for carrying their business activities..and to one of HUF .Will there be any GST applicable.

    1. varsha_nayyar says:

      It depends on whether the output service is exempt or taxable.

      If exempt like PG then no he cannot take any input service Credit.

      If taxable can take input service except for blocked credits u/s 17(5).

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