GST Registration Requirement for Medical Practitioners Having Rental Income from Commercial Property

Medical practitioners in India providing healthcare services are generally exempt from GST registration. However, when such professionals also derive income from other sources, like renting out commercial property, the applicability of GST and the need for registration becomes a grey area for many. This article explains whether a medical practitioner earning exempt professional income and taxable rental income must register under GST and charge tax on rent.

GST and Healthcare Services

Under Notification No. 12/2017-Central Tax (Rate), healthcare services provided by a clinical establishment, authorized medical practitioner, or paramedics are exempt from GST. Therefore, income from medical practice, even if it exceeds the threshold limit, does not attract GST and does not require the professional to register under GST on account of such services alone

Rental Income from Commercial Property

The situation changes if the medical practitioner earns income from renting out commercial property. According to GST law:

•  Renting of residential property for residential use is exempt from GST.
•  Renting of commercial property, however, is a taxable supply under GST, attracting tax at 18%.

Understanding Aggregate Turnover and Registration Threshold

As per Section 22 of the CGST Act, 2017, a person is required to register for GST if their aggregate turnover in a financial year exceeds:

• ₹20 lakhs (₹10 lakhs for special category states).

Here, aggregate turnover includes:

• Taxable supplies (e.g., rent from commercial property).
• Exempt supplies (e.g., medical services).

In the given case:

• Medical services income (exempt): ₹35 lakhs.
• Rental income from commercial property (taxable): ₹7 lakhs.
• Total aggregate turnover: ₹42 lakhs.

Since the aggregate turnover exceeds ₹20 lakhs, the practitioner must register under GST.

Obligation After GST Registration

Once registered:

• Medical services will remain exempt from GST.
• The practitioner must charge GST @18% on the rent received from the commercial property tenant.
• GST needs to be collected and paid to the government, and monthly/quarterly returns filed.

What If the Tenant is Unregistered?

Even if the tenant is unregistered, the landlord (in this case, the medical practitioner) must collect GST on rent and deposit it with the government.

There is no reverse charge mechanism (RCM) applicable when both landlord and tenant are unregistered.

Consequences of Non-Registration

Failing to register under GST and not charging tax on commercial rental income despite crossing the threshold can result in:

• Demand for unpaid GST on the taxable supplies.
• Interest and penalty for non-compliance.

Conclusion

A medical practitioner providing exempt healthcare services is not required to register for GST on account of such services, irrespective of turnover. However, if they also earn rental income from a commercial property, and their aggregate turnover (medical + rental) exceeds ₹20 lakhs, GST registration becomes mandatory. After registration, GST must be charged and paid on the commercial rental income.

To avoid compliance issues and penalties, medical practitioners in such situations should apply for GST registration and start charging GST on commercial rentals without delay.