1. Renting of commercial property
2.1 Taxability of renting of commercial property
Renting of immovable properties has been divided in two part one is renting of commercial property and other is renting of residential property. Service by way of renting of commercial property is leviable to GST under forward charge mechanism form the inception of GST Law. Thus it is not relevant whomsoever the service recipient only relevant whether the service provider is register or not. If the services provider is registered person, he would charge GST in Tax Invoice otherwise GST is not leviable.
Conclusion:
Renting of commercial property have never been exempted under GST Law since inception of GST. Hence, if the service provider of renting of commercial property is register person then it would charge GST in Tax Invoice.
2.2 ITC of renting of commercial property
Input tax credit would be available on renting of property whether it is commercial or residential where it has been used for in course or furtherance of business of registered person. Hence it can conclude that Input tax credit is available in all cases where condition mentioned in section 16 and section 17 of CGST Act, 2017 have been complied.
2.3 Place of business:
Whether the property taken on rent or given on rent should be register as place of business?
Supplier point of view
If it is a place from where the business ordinarily supplies goods or services or both, then as per section 2(85) of CGST Act, 2017 such property would be considered as place of business hence it should be register as additional place of business of company
Recipient point of view
If it is a place where the business ordinarily receives goods or services or both, then as per section 2(85) of CGST Act, 2017 such property would be considered as place of business hence it should be register as additional place of business of company.
Extract of Law:
Definition under section 2(85) of CGST Act, 2017
“place of business” includes-
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called
2. Renting of Residential property
2.1 Taxability of renting of Residential property
On the other hands Renting of residential property was exempted by Notification no. 12/2017-Central Tax (Rate) dated 28th June 2017 where the property is used for residence, otherwise taxable under GST. In other words, where the residential property is used in course of or furtherance of business GST would be leviable.
However, the above mentioned exemption has been withdrawn w.e.f. 18th July 2022 through vide Notification No. 04/2022 -Central Tax (Rate) dated 13th July 2022 in line with press release issued by CBIC after 47th GST Council meeting dated 29th June 2022.
The exemption has been withdrawn only in cases where the residential property has been rented to a register person either for business or residence use. Hence the inference can be drawn that GST would be levied in all circumstances where recipient of service is register person in case of residential property and further as per Notification No. 05/2022 -Central Tax (Rate) dated 13th July 2022 where the residential property has been rented to a register person (recipient of service), then the register person (recipient of service) would be liable to discharge the GST.
Further it has clarified that where the register person (landlord) has given residential property on rent to tenant who has unregistered person and he used this property for business purpose, then the register person (landlord) should charge GST in his Tax Invoice under forward charge mechanism since inception of GST law.
2.2 ITC of renting of Residential property
Input tax credit would be available on renting of property whether it is commercial or residential where it has been used for in the course or furtherance of business of registered person. In this order the nature of property is never relevant to decide whether input tax credit available or not, whereas how the property is used by recipient of service is relevant factor to decide credit eligibility. Hence it can conclude that Input tax credit is available where condition mentioned in section 16 and section 17 of CGST Act, 2017 have been complied.
2.3 Place of business:
Whether the property taken on rent or given on rent should be register as place of business?
Supplier point of view
Where the supplier is registered person and it is a place from where the business ordinarily supplies goods or services or both, then as per section 2(85) of CGST Act, 2017 such property would be considered as place of business hence it should be register as additional place of business of company
Recipient point of view
Where the recipient is registered person and it is a place where the business ordinarily receives goods or services or both, then as per section 2(85) of CGST Act, 2017 such property would be considered as place of business hence it should be register as additional place of business of company.
Extract of Law:
Definition under section 2(85) of CGST Act, 2017
“place of business” includes-
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called
I have presents above discussion in tabular form for easy understanding.
| Sl. | Owner | Property | Use of Property | Tenant | GST | ITC |
| 1 | Register | Commercial | Residence | Register or Unregister | GST (FCM) | Not Allowed (Personal Consumption) |
| 2 | Register | Commercial | Business | Register | GST (FCM) | Allowed (Business use) |
| 3 | Unregister | Commercial | Business | Register | No GST | NA |
| 4 | Unregister | Commercial | Any use | Unregister | No GST | NA |
| 5 | Unregister | Residential | Any use | Unregister | No GST | NA |
| 6 | Unregister or Register | Residential | Residence | Register | GST (RCM) | Not Allowed (Personal Consumption) |
| 7 | Unregister or Register | Residential | Business | Register | GST (RCM) | Allowed (Business use) |
| 8 | Register | Residential | Business | Unregister | GST (FCM) | NA |
| 9 | Register | Residential | Residence | Unregister | GST (Exempt) | NA |
Extract of Relevant notifications
Old Provision
Serial no. 12 of amended Notification No. 12/2017 before 18th July 2022.
| Sl. No | Chapter, Section, Heading, Group or Service Code (Tariff | Description of Services | Rate (per cent.) | Condition |
| 12 | Heading 9963 or Heading 9972 | Services by way of renting of residential dwelling for use as residence. | NIL | NIL |
Current Provision
Serial no. 12 of amended Notification No. 12/2017 on or after 18th July 2022.
| Sl. No | Chapter, Section, Heading, Group or Service Code (Tariff | Description of Services | Rate (per cent.) | Condition |
| 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 a registered person. | NIL | NIL |
Author Bio
X the GST Registered Owner of Commercial property in Tamil Nadu lease to Y company. The Y was having in Karnataka GST Registration certificate. How, can I Raise tax invoice for place of supply and charge GST (CGST&SGST or IGST) kindly help me as per gst rules.
IF recipient is liable to pay RCM on renting of residential property being a registered person than how it will be decided that which type of GST i.e. IGSt or CGS/SGST to be paid under RCM .
Notification 12/2017 CT (R) dated 28.06.2017 Serial Number 139(iii) “Renting of Shops or other spaces for Business or commerce where charges are Ten Thousand or more Per Month” also to be taken under consideration. Means if the monthly rent is less than Rs.10000/= Per month it is exempted from GST.
Can the Supplier of Service (the Land Lord) who is Registered Pay the Tax on Forward Charge by making Declaration in the invoice, as per Annexure III, as per Notification No. 05/2022-CentralTax (Rate) I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of Rental Service to Registered dealer in relation to renting of residential accomodation services by us