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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24 Comments

  1. Dinesh Patel says:

    I am a sleeping partner and my tax free income is Rs. 30 lacs from the profit share. I get Rs. 9 lacs as a technical consultant. Now if I give my commercial property on yearly rent of Rs. 3.6 lacs, do I need GST Registration? My service income is Rs. 9 lacs so turnover is considered as 9 lacs or 39 lacs? Thanks.

  2. AMIT says:

    If a company whose turn over is over 20 lakhs Lease out a residential house for residential purpose, do they need to charge GST??

  3. BHARTI CHAUDHARI says:

    I have GST registration from MUMBAI and I have given my property on Rent to Bank which fall in GUJARAT . We were charging IGST-18% From bank and he is giving regular tax from past Many years . Suddenly bank stop giving our IGST-18% by stating reason that we have to take registration from GuJARATA and they will pay us only CGST/SGST only. Please guide us can we charge legally IGST-18% under which section to avoid taking another number from . Regards

    1. Vivek Srivastava says:

      This is because of place of supply, as per ruling tax will charge as per place of supply and in case of rent place of supply always intra state supply because building is immovable assets that’s why cgst and sgst will applicable instead of igst

  4. Bala Chandra says:

    Is renting of Municipality/Government commercial building taxable under GST? Ex. Municipality owned shops
    What is rate of tax if taxable?

  5. PREM KUMAR says:

    I have GST registration from Delhi and I have given my property on Rent to Bank which fall in Gurgaon, Haryana. We were charging IGST-18% From bank and he is giving regular tax from past Many years .
    Suddenly bank stop giving our IGST-18% by stating reason that we have to take registration from Gurgaon and they will pay us only CGST/SGST only.
    Please guide us can we charge legally IGST-18% under which section to avoid taking another number from Haryana .
    Regards

  6. BIRABARA MOHARANA says:

    IF AN INDIVIDUAL UNREGISTERED(GST) PROVODING IMMOVABLE PROPERTY SAY BUILDING ON RENT COMMERCIAL BASIS TO A GST REGISTERED ORGANIZATION AND RECEIVED RS.20LACS ABOVE AS RENT. WHAT IS THE GST SCENARIO TO THE ORGANIZATION. PLZ CLARIFY.

  7. Sandip Giri says:

    A taxable person takes a residential premises for his employees’ accommodation purpose. Accommodation to employees’ is a free of cost. The landlord is also a taxable person in same state. Please advice whether landlord will charge GST @ 18% and ITC is available to the service recipient or not.

  8. Ashish Agarwal says:

    Hello, if a Owner has 1 Commercial property in Gujarat, which he has let out and is charging Rent+GST. For the same, Owner has GST Registration No. in Gujarat. Now, he buys another Commercial Property in Maharashtra and wants to let it out. Would he need to get another GST Number in Maharashtra OR his existing GST Number of Gujarat would suffice for raising Rental Invoices with GST? Thanks

    1. varsha_nayyar says:

      There is no clarity from the department… its better to pay tax… As per my view since used for residential purposes exempt from GST but no clarification in law

  9. Siddhant Agrawal says:

    if the person is already registered under the composition scheme and his rental income and aggregate turnover of the business is less than 20 lacs, is he required to get himself registered under the regular scheme and charge GST just because he is already registered under GST as a composition taxpayer ?

    1. varsha_nayyar says:

      You can pay tax either in a composition scheme or regular scheme. If you are in composition and all the conditions of the composition scheme has been satisfied then no need to opt for a regular scheme. If turnover is less than 20 lakhs no need to register in GST

  10. 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).

        1. varsha_nayyar says:

          IGST/ CGST and SGST Depend upon Whether the Location of Supplier and Place of Supply is within the same State.

          For Immovable property place of supply will be immovable Property and Location of supplier will be Place of business for which registration has been obtained i.e will be in same state

          So yes you are right

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