Para 5(a) of Schedule II and akin to section 66E(a) {Declared Services} of the Finance Act, 1994, Renting of Immovable Property shall be treated as supply of services in GST.

“Renting of immovable property  means allowing, permitting, or granting access, entry, occupation, use or any such facility, wholly or partially, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.”

“Immovable Property : As per sec 3(26) of the General Clauses Act, 1897, ‘immovable property’ shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth”

Further, Scope of renting of immovable property services may also include renting of accommodation in any Hotel, Inn, Guest House, etc.

Exemption to renting of immovable property for residential purpose:

Before 18.07.2022 Services by way of residential dwelling for use as residence falling under Heading 9963 or 9972 is exempted from GST vide S.No. 12 of the Notification No. 12/2017 – central tax(rate) dated 28.06.2017/ Notification no. 12/2017 – integrated tax (rate) dated 28.06.2017, as amended.

After 18.07.2022  Now as per 47th GST Council recommendations, CBIC has given Notification No. 4/2022 – Central Tax (rate), Dated 13.07.2022 withdrawn such exemptions.

Now onwards, as per Notification No. 05/2022-Central Tax Rate) dated. 13.07.2022, an unregistered person(Not registered under GST) has given the residential house property rented out to a registered person (Registered under GST ) is liable to pay  GST under Reverse Charge Mechanism by the Tenant.

If a residential property owner (Landlord) is unregistered under GST Law, he has given such residential property to a registered person (Registered under GST Law), for use the purpose of residential under that circumstance, Tenant is liable to pay GST tax @18% under Reverse Charge Mechanism (RCM) as per Notification No. 05/2022-Central Tax Rate) dated. 13.07.2022.

Govt says claim of 18% GST on house rent for tenants is misleading

Further, it also said that no GST is applicable when it is rented to a private person for personal use. No GST is applicable even if the proprietor or partner of the firm rents residence for personal use, the tweet said.
Example – When an individual who is registered taxpayer under GST Law,2017, as a proprietary concern, takes a residential house property for the purpose of residence on rent for him or her or family then it will be considered as an item of personal expenditure and not the business expenditure of a proprietary concern. Hence, GST under RCM is not applicable on him because he use that house property for his personal residence GST is applicable only when it is rented to business entity.

Author Bio

Qualification: CA in Practice
Company: RICHANK MALHOTRA & ASSOCIATES
Location: DELHI, Delhi, India
Member Since: 11 Jul 2022 | Total Posts: 3
Richank has over 6 years of professional experience in handling Audit & Assurance of various entities, Direct & Indirect Tax Advisory services, Litigation Services, and Finalization of Income Tax returns, Monthly Compliance which includes GST, TDS and other Statutory Compliance on a regular View Full Profile

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