Summary: The GST treatment of renting properties in India varies between residential and commercial contexts. From 1st July 2017 to 17th July 2022, renting residential property was exempt from GST under Notification 12/2017-Central Tax, regardless of whether the landlord or tenant was registered. However, starting 18th July 2022, if the tenant is registered under GST, the renting becomes taxable, with the tenant responsible for paying 18% GST under the Reverse Charge Mechanism (RCM). Conversely, if the tenant is unregistered, renting remains exempt. For commercial properties, GST is consistently applicable at 18% whenever the landlord is registered, and the landlord is responsible for charging and remitting the GST under the forward charge mechanism. If the landlord is unregistered, the tenant must pay GST under RCM, effective from 10th October 2024. This distinction highlights the different approaches to taxation based on the property’s nature and the registration status of the parties involved.
Case 1: GST on Renting of Residential Property
| Particulars | 1st July 2017 to 17th July 2022 | 18th July 2022 Onwards |
|---|---|---|
| Conditions for GST exemption | – Renting must be for residential purposes only. | – Renting must be for residential purposes, and the tenant must be unregistered under GST. |
| Where both landlord and tenant are registered | Exempt (Notification 12/2017-Central Tax) | GST @18% applicable, payable by tenant under Reverse Charge Mechanism (RCM). |
| Where only the tenant is registered | Exempt (Notification 12/2017-Central Tax) | GST @18% applicable, payable by tenant under RCM. |
| Where the tenant is unregistered | Exempt (Notification 12/2017-Central Tax) | Exempt from GST |
| If residential dwelling is used for commercial purposes | GST @18% applicable under forward charge | GST @18% applicable under forward charge |
Clarifications for Case 1:
- GST Position from 1st July 2017 to 17th July 2022:
- Renting of residential property for use as a residence was exempt from GST under Notification 12/2017-Central Tax (Rate) dated 28th June 2017.
- GST Position from 18th July 2022 onwards:
- Renting of residential properties became taxable if the tenant is a registered person (Notification 04/2022-Central Tax (Rate) dated 13th July 2022).
- The GST is payable by the registered tenant under RCM (Notification 05/2022-Central Tax (Rate) dated 13th July 2022).
- If the tenant is unregistered, then no GST is applicable.
Case 2: GST on Renting of Commercial Properties
| Particulars | GST Applicability on Renting of Commercial Property |
|---|---|
| Landlord is registered | GST @18% applicable and payable by the landlord under forward charge. |
| Landlord is not registered | GST @ 18% by Tenant under Reverse Charge w.e.f. 10th October 2024. |
| If the property is used for commercial purposes | GST @18% is applicable regardless of the nature of use by the tenant. |
Clarifications for Case 2:
- For renting of commercial properties, GST is always applicable at 18%, provided the landlord is a registered person.
- The landlord is required to charge GST on the rent and remit it to the government under the forward charge mechanism.
- If the landlord is not registered under GST (because the aggregate turnover does not exceed the threshold limit), then GST is to be paid by tenant under Reverse Charge Mechanism as per Notification No 09/2024 – Central Tax (Rate) dated 08th October 2024, and the landlord does not need to charge GST.
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