As per sub-section (1) of section 11 of Central Goods and Services Tax Act, 2017, the services by way of renting of residential dwelling for use as residence (under Heading 9963 or Heading 9972) were exempt under GST.
With Effect From 18.7.2022.
The Central Government has issued a Notification (04/2022- Central Tax (Rate) dated 13.7.2022, amending the Notification 12/2017 dated 28.6.2017, against “Serial number 12 in column (3)” after the words “as residence”, the words, “except where the residential dwelling is rented to registered person” shall be inserted.
| Sr. No | HSN/SAC | Description of Services | Rate | Conditions |
| 12 | Heading 9963 or Heading 9972 | Services by way of renting of residential dwelling for use as residence except where the residential dwelling is rented to registered person | Nil | Nil |
Further, Notification 05/2022-Central Tax (Rate) dated 13.7.2022, states that the services by way renting of residential dwelling for use as residence to be covered under Reverse Charge Mechanism (RCM) at the rate of 18% under entry 5AA.
“Services by way of renting of residential dwelling to a GST registered person for either residential or commercial purpose, shall attract GST and is to be paid under RCM in the hands of the GST Registered person who is the recipient of such services.”
| SI No. | Category of Supply of Service | Supplier of services | Recipient of services |
| 5AA | Services by way of renting of residential dwelling to a registered person | Any person | Any registered person |
The below tables clearly show analysis of the above notification:
Scenario-1:
| When residential property is rented out for Residential purpose by Registered supplier | |||
| Applicability | To unregistered recipient | To registered recipient | |
| Taxability | Exempt under GST | Upto 17.07.2022 | W.e.f. from 18.07.2022 |
| Exempt under GST | GST @ 18% under RCM | ||
| ITC | NA | NA | ITC may be denied by the department considering such supplies are used for personal consumption of employees under section 17(5) of CGST Act, 2017 |
| Notification No | Notification 12/2017 dated 28.6.2017 | Notification 12/2017 dated 28.6.2017 | |
Scenario-2:
| When residential property is rented out for Residential purpose by Unregistered supplier | |||
| Applicability | To unregistered recipient | To registered recipient | |
| Taxability | NA | Upto 17.07.2022 | W.e.f. from 18.07.2022 |
| Exempt under GST | GST @ 18% under RCM | ||
| ITC | NA | NA | ITC may be denied by the department considering such supplies are used for personal consumption of employees under section 17(5) of CGST Act, 2017 |
| Notification No | NA | Notification 12/2017 dated 28.6.2017 | |
Scenario-3:
| When residential property is rented out for Commercial purpose by Registered supplier | |||
| Applicability | To unregistered recipient | To registered recipient | |
| Taxability | Forward charge @ 18% | Upto 17.07.2022 | W.e.f. from 18.07.2022 |
| Forward charge @ 18% | GST @ 18% under RCM | ||
| ITC | ITC can be claimed | ITC can be claimed | ITC can be claimed by recipient |
| Notification No | Notification 12/2017 dated 28.6.2017 | Notification 12/2017 dated 28.6.2017 | |
Scenario-4:
| When residential property is rented out for Commercial purpose by Unregistered supplier | |||
| Applicability | To unregistered recipient | To registered recipient | |
| Taxability | NA | Upto 17.07.2022 | W.e.f. from 18.07.2022 |
| NA | GST @ 18% under RCM | ||
| ITC | NA | NA | ITC can be claimed by recipient |
| Notification No | NA | NA | |
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