From the Goods and Services Tax (GST) perspective, renting of residential and commercial property is treated as a ‘supply of service’. The present article briefly discusses GST applicability on rent in the case of both residential property and commercial property.
Page Contents
- GST on renting of residential property
- GST applicability on renting of residential property from 1st July 2017 till 17th July 2022
- GST applicability on renting of residential property from 18th July 2022 onwards
- GST on renting of commercial property
- Gist of GST applicability on renting of residential and commercial property
- Frequently Asked Questions (FAQs) related to GST on rent of residential and commercial property
GST on renting of residential property
Renting income in the case of residential property has undergone a drastic change with effect from 18th July 2022. Hence, in order to go through the entire scenario of GST applicability on renting of residential property, we need to bifurcate the same in the following two periods –
1. From 1st July 2017 till 17th July 2022; and
2. From 18th July 2022 onwards.
GST applicability on renting of residential property from 1st July 2017 till 17th July 2022
GST @18% is applicable on the renting income. However, it is important to go through exemption notification no. 12/2017- Central Tax (Rate) dated 28th June 2017.
Notably, sr. no. 12 of the said exemption notification covers entries relating to renting of residential property which is reproduced hereunder for ready reference –
| Heading | Description | Effective Rate |
| 9963 or 9972 | Services by way of renting of residential dwelling for use as a residence | NIL |
Accordingly, GST exemption will be available in the case following conditions are satisfied –
Condition 1 – The registered person is engaged in providing service relating to renting of residential dwelling; and
Condition 2 – The rented residential dwelling is used by the tenant for the purpose of residence.
Thus, summarizing the position of GST applicability on renting of residential property for the period from 1st July 2017 till 17th July 2022, the scenario will be –
|
Particulars |
GST applicability |
| When the residential dwelling is rented for the purpose of residence | NIL |
| Any other situation | 18% |
GST applicability on renting of residential property from 18th July 2022 onwards
Based on the 47th GST council recommendation, the above position of GST applicability on renting of residential property is amended vide the following two notifications –
1. Notification no. 04/2022- Central Tax (Rate) dated 13th July 2022 – which amended the exemption notification no. 12/2017- Central Tax (Rate) dated 28th June 2017; and
2. Notification no. 05/2022- Central Tax (Rate) dated 13th July 2022 – which introduced reverse charge under renting of residential property by amending notification no. 13/2017- Central Tax (Rate) dated 28th June 2017.
Post amendment as introduced vide Notification no. 04/2022- Central Tax (Rate) dated 13th July 2022, exemption entry speaks as under –
|
Heading |
Description | Effective Rate |
| 9963 or 9972 | Services by way of renting of residential dwelling for use as a residence except where the residential dwelling is rented to a registered person. | NIL |
Accordingly, from 18th July 2022, GST exemption will be available in case the following conditions are satisfied –
Condition 1 – The registered person is engaged in providing service relating to renting of residential dwelling; and
Condition 2 – The rented residential dwelling is used by the tenant for the purpose of residence; and
Condition 3 – The tenant is not registered under GST.
Now, as can be concluded from above that if the tenant is registered under GST, then, GST will get applicable on renting of residential dwelling from 18th July 2022.
However, notably, the landlord is not required to worry about the GST applicability. As the entire GST liability is mounted on the registered tenant under the reverse charge mechanism.
Notification no. 05/2022- Central Tax (Rate) dated 13th July 2022 covers reverse charge applicability in case of GST on renting of a residential dwelling. Relevant Sr. No. 5AA of the said notification is reproduced hereunder –
|
Sr. No. |
Description of service | Service provider | Service receiver |
| 5AA | Services by way of renting of a residential dwelling to the registered person. | Any person | Any registered person |
The following table provides a comparative analysis of GST applicability/ exemption on renting of residential dwelling for both the periods i.e., from 1st July till 17th July 2022 and from 18th July 2022 onwards –
|
Particulars |
1st July 2017 till 17th July 2022 | 18th July 2022 onwards |
| Conditions to be satisfied for availing GST exemption on renting of residential dwelling |
|
|
| GST applicability when the residential dwelling is used for residential purpose and the tenant is registered under GST | NIL | GST applicable @18% and GST is payable by tenant under reverse charge. |
| GST applicability when the residential dwelling is used for residential purpose and the tenant is not registered under GST | NIL | NIL |
| GST applicability when the residential dwelling is used for residential purpose and the landlord is registered under GST | NIL | GST is applicable only if the tenant is registered under GST |
| GST applicability when the residential dwelling is not used for residential purpose | GST applicable @ 18% | GST applicable @ 18% |
GST on renting of commercial property
GST applicability on renting of commercial property is quite simple. Accordingly, GST is applicable @ 18% under forward charge on renting of commercial property. The scenario of GST on renting of commercial property is tabulated hereunder –
|
Particulars |
GST applicability on renting of commercial property |
| The landlord is registered under GST | GST @18% applicable and payable by the landlord under forward charge |
| The landlord is not registered under GST | GST not applicable |
Gist of GST applicability on renting of residential and commercial property
The following table summarizes the gist of GST applicability on renting of both residential and commercial property –
|
Particulars |
Status of landlord | Status of tenant | GST applicability |
| GST applicability on renting of residential dwelling for the period 1st July 2017 till 17th July 2022 | |||
| Renting of residential dwelling for use as a residence | Registered/ unregistered | Registered/ unregistered | Exempt in terms of notification no. 12/2017- Central Tax (Rate) dated 28th June 2017. |
| GST applicability on renting of residential dwelling for the period from 18th July 2022 | |||
| Renting of residential dwelling for use as a residence | Registered | Registered | Taxable in terms of notification no. 04/2022- Central Tax (Rate) dated 13th July 2022.
However, GST is payable by the tenant under the reverse charge mechanism in terms of notification no. 05/2022- Central Tax (Rate) dated 13th July 2022. |
| Renting of residential dwelling for use as a residence | Unregistered | Registered | Taxable in terms of notification no. 04/2022- Central Tax (Rate) dated 13th July 2022.
However, GST is payable by the tenant under the reverse charge mechanism in terms of notification no. 05/2022- Central Tax (Rate) dated 13th July 2022. |
| Renting of residential dwelling for use as a residence | Registered | Unregistered | Exempt in terms of notification no. 12/2017- Central Tax (Rate) dated 28th June 2017. |
| Renting of residential dwelling for use other than residence | Registered | Registered/ Unregistered | Taxable as exemption notification doesn’t apply. |
| GST applicability on renting of commercial property for the period from 1st July 2017 till date | |||
| Renting of commercial property | Registered | Registered/ Unregistered | Taxable @18% |
| Renting of commercial property | Unregistered | Registered/ Unregistered | Exempt |
Some of the important Frequently Asked Questions relating to GST applicability on rent on residential and commercial property are answered hereunder –
Q.1 Who is liable to pay GST on rent on commercial property?
Ans. GST @ 18% on rent on commercial property is payable by the registered service provider (i.e. landlord). There is no reverse charge mechanism applicable in case of GST on rent on commercial property.
Q.2 Is RCM applicable on rent for commercial property?
Ans. No, there is no reverse charge applicability on rent for commercial property.
Q.3 Is residential rent GST free?
Ans. Residential rent was totally GST free from 1st July 2017 till 17th July 2022. However, from 18th July 2022, the residential rent is not GST free if the tenant is registered under GST.
Q.4 Is GST applicable on residential dwelling?
Ans. GST was exempt on residential dwelling till 17th July 2022. However, GST @18% is applicable on residential dwelling, from 18th July 2022, if the tenant of the residential dwelling is registered under GST.
Q.5What is the meaning of residential dwelling?
Ans. Residential dwelling is not defined under the Central Goods and Services Tax Act, 2017. The general and simple meaning of residential dwelling is ‘living in a certain place, permanently or for a considerable length of time’.
Q.7 Is GST charged on residential rent?
Ans. With effect from 18th July 2022, GST is payable on residential rent if the tenant is registered under GST. In such case, GST is payable @18% by the tenant under the reverse charge mechanism.
Q.8 How does GST apply to residential rent?
Ans. From 1st July 2017 till 17th July 2022, GST is exempt in case of residential rent if the specified conditions are satisfied. However, from 18th July 2022, GST applicability/ exemption to residential rent has underwent a major change.
Q.9 Is commercial rent GST exempt?
Ans. No, there is no exemption available to commercial rent under GST.
Author Bio
Hi Sir,
My boss having a commercial building and having a GST registration, recently the building is given to a PWD Government Department, rent charged around Rs.3,00,000/- Per Month. Please advice whether the GST is applicable is yes what is the percentage.
If the Commercial space is rented to a Not-for-Profit Corporation is GST payable? If the Custodian of the Corporation resides in the Space, does this affect the rate. The Person is not Registered, it is the Corporation which is Registered.
I am Registered Person and i have given my residential property to a Unregistered person for residential purpose do i have to charges GST ?
if GST applicable what if we both are registered under GST then RCM will be applicable or FCM?
I have received a residential property under draw from Up government (lease for 90 years). I am a registered dealer of GST. Pl tell me that is GST liable on me under reverse charge mechanism (RCM)..
I have received a residential property under draw from Up government (lease for 90 years).
I am a registered dealer of GST. Pl tell me that is GST liable on me under reverse charge mechanism (RCM)..
I am GST registered dealer in Maharashtra, I am receiving Rs.25000 rent from commercial property in Chennai, whether I should charge IGST or CGST and SGST.
if landlord is comes under 20 lakhs turnover annually and he is not registered. in this case wgeter tenant is charged for gst? if no please provide a copy of notification highly thankfull.
i have fuel station and sell only petrol and diesel and no lubes. i have rental income which is below 20.00 lakhs. do I need gst registration?
also do I have pay gst on rent?
Depends on your total turnover.
I am Govt. employee I wish to rent out my flat to an unregistered tenant for residential purpose, is GST applicable on me or tenant, please advise.
since you both are unregistered, GST will not be attracted
What is the liability of a licensor (landlord) in a rented shop, if the licensee tenant takes a GST number on the rented shop address and doesn’t pay the GST on time?
I have rented my commercial office space in chennai for 187500 per month. I would like to know when is the last date for paying the gst ?
Regards
Rajiv
20th of the subsequent month
I am not registered in GST. I rented my shop commercial property for 2 lakh per year to a registered GST dealer. Is it taxable??
it will be taxable under RCM to the recipient of that service i.e registered person…no liability for you in this case
rent received Unragistered Person for commercial properties rs.2 lakh onwards . So Gst Applicable or not.
just wanted to understand better … my residential property in Mumbai is on rent for commercial purposes and tenant requiring GST details so how does whole process works.
also want to understand do owner need to register under GST and how…. require an urgent update so can move forward.
Your Gist does not cover the following scenario:
Position prior to 17h July’22 and post 17th July’22
Renting of residential dwelling for use other than residence
Landlord : UnRegistered
Tenant : Registered
I would like to ask if GST on RCM basis will be applicable if the rent is being paid by a company directly to the landlord of the employee.
taxability will be in the hands of company (if registered under GST) on RCM basis
Dear sir,
We are a gst registered dealer in chennai .We have paid some rents to our shop owners (unregistered persons) . I have not not taken any amount under RCM
Will commercial rent paid to registered landlors attract RCM ?
Please suggest me .
I am not registered in GST.
i rented my shop commercial property for 3lakh per year to a registered GST dealer .
is it taxable.
no liability for you….GST will be liable in hands of recipient of services under RCM
I am a Registered Dealer and my Turnover was more than threshold Limit. My tenant is Government.The building used for the purpose of Library.In this portion not deducting GST.
Another one part used for Begger Home. The Begger Home pays the Rent after Deducting GST 2%.
My Question is can I collect GST on Rent for the above usages?
Please provide the Act and Rules for the above.
Please confirm if GST is applicable when landlord is is not registered under GST and he gives his residential property on rent for commercial use to an unregistered tenant.
Dear Sir,
You have not mentioned following important fact,
Further, the service of renting an immovable property would attract GST only when the rent exceeds Rs. 20 lakhs for a given financial year.
Please inform us about your opinion about the Rs 20 lakh threshold for landlords. Both registered and unregistered landlords are fully exempt upto Rs 20 lakh per year rental income?
I am a Tenant paying Rs.1 lakh per month (12 lakhs annually) rent for my Hotel business to an unregistered Landlord. Is there any GST liability on any of us ? Wether Tenant or Landlord