CA C.P.Ethirajan

As per schedule I supply of service without consideration to related/ distinct person will be treated as supply. Admitting a person into a premises for “consideration” alone can be treated as business under Sec 2(17)(f).  It is not clear whether schedule I can override section 2(17)(f).

As per Section 9(4), the registered taxable person, who receives goods or service from unregistered person, the receiver, will have to discharge the tax liability. Strangely, the word service or good “received in the course or furtherance of business” is not used in this section.

This leads us to conclude that an individual paying tax on renting of immovable property has to pay tax under RCM on all goods and service received by him from unregistered even for personal use. Unfortunately no input tax is available on such tax. This not only puts a burden on inflow but the said individual has to prepare self invoice and also file return for the same. To avoid the hazels, he may have to deal with register persons only, but still has to upload such transaction in his monthly return without claiming input tax credit.

 Let us take the case of a small trader (proprietor) or an individual having taxable rental income but whose turnover is below 20 lakhs

He need not get himself registered under GST. Assuming such person pays some legal fees to advocate, and then he has to get himself registered for purpose of paying GST under RCM even though his turnover is below threshold limit, his is as per section 9(5) of CGST Act. Once he becomes a “registered person” under GST, the provisions section 9(4) is also attracted, which means he has to pay tax under RCM ON ALL goods/ service received from a unregistered persons resulting in undue hardship in payment of tax under RCM (with no ITC) and also need to generate self invoice and upload the same in monthly return.

An individual may be residing in one state and having immovable property in another state. Controversy has already started whether he has to pay IGST or CGST in the state where property is located.

To conclude, it will be better if clarification is given by CBEC above points.

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57 responses to “Hidden problem for renting of immovable property service provided by individuals under GST”

  1. says:

    I have GST number in the name of proprietorship firm. I am planning to buy a commercial office . should I get GST rebate taken by builder to me . they(builders) are taking 12% of GST from me to buy a commercial office . in my proprietorship firtm i am also charging 18% GST on my construction service to my clients. should I get rebate of GST paid to buy a commercial office ?

  2. Rajesh R says:

    Hi, I usually pay the Service Tax on rent by reducing the corporation tax on the rent that i receive on the same property. I can the same be followed even in the new GST system ?

  3. R k Pandey says:

    My firm is regd.under gst .the work place is rental one land lord is an individual.wheather Ihave to pay gst on rent paid.under reverse tax scheme and if so from Whitch month and what will be the rate

  4. Amit Vatkar says:

    can anyone guide in relation to GST.
    I am adr who has takena hospital on rent with yearly rent paid of 13 lakhs.
    the owner is also a ldoctor whose has no other erntal income but has a professional income of 20 lakhs.
    should a pay G ST even though the rental earning is 13 lakh?

  5. PRASENJIT ROY says:

    (1.) WHICH OPTION TO CHOOSE FROM (REASON TO OBTAIN GST Registration while filling the form)? I CHOOSE THE OPTION liability to pay as recipient of goods or services. IS IT COORECT?
    please reply as soon as possible….

    • deepanshu bansal says:

      Sir, My uncle has a property which is given on rent @ 50,000/- per month for commercial purpose and the tenant had deduct TDS @10% and GST @18%. My uncle can claim back the TDS through the income tax filling but how to claim back the GST which is already deducted by Tenant under RCM. My uncle total taxable service is Rs 6,00,000/- so he don’t need to register under GST but how to claim back the GST which is deducted under RCM by tenant?

    • Ashwin kumar says:

      No need to register in GST if your income falls below 20 lakhs. Your lessee has no authority to deduct the GST from your income. Instead he the to pay the GST on RCM basis.

  6. Vrunda Pathade says:

    If i am (Individual/ Proprietor) registered under GST having rental property income which is for commercial purpose. Can i get Input Tax Credit against GST paid on 1) Maintenance 2) Security 3) Insurance 4) Repairs etc… expenses and the same is for the same property of income i receive or the expenses for any other property also i can avail Input Tax Credit. Please guide..

  7. Dr rashid khan says:

    I am getting rental income of rs 10000 from a govt bank ATM at my premises at a prominent city in uttar Pradesh .I came to know that the bank gas deducted gst from this month’s rent .How can I claim the deduction under gst now .What is the exact procedure to do it ?

  8. Rounak sawaria says:

    I am a registered dealer in Tamil Nadu.
    I am paying rent of Rs. 14000 p.m. to my landlord who
    Is not registered under GST.
    My landlord’s total rental income is less than 20 lakhs.
    Am I liable to pay GST on rent under RCM.

  9. Ashvez says:

    What will be the GST implications on rental Income?




    10 ANSWERS

    Abhilash Patil, very impressive online learning platform.

    Answered Jul 18

    Rental properties are presently subject to service tax, under certain conditions. We examine how the proposed Goods and Services Tax and the provisions for tax deduction at source, will impact one’s rental income

    The rental income from a real estate investment, is taxed under the head ‘Income from House property’ under the income tax laws, which is a direct tax law of the country. Properties that are let-out, are also subject to indirect taxation in the form of service tax, presently. The lessee of the property is also required to deduct TDS (tax deducted at source), while the proposed GST (Goods and Services Tax) will also impact the tax computation on rental income.

    Existing service tax laws

    Presently, the landlord has to obtain a service tax registration, in case his total of taxable service including the rental income from all the properties, exceeds the basic limit of Rs 10 lakhs per year. So, as long as your rental income from all the properties owned by you in India, does not exceed Rs 10 lakhs, you are outside the purview of the service tax net.

    The current law exempts the rent received, with respect to residential house property let-out for residential purposes, from the levy of service tax. Only commercial properties attract service tax levy, at present. Any residential property used for commercial purposes, will also attract levy of service tax. The limit of Rs 10 lakhs, applies only for the taxable services. So, even if your rental of residential properties exceeds Rs 10 lakhs, you will not have service tax liability, as long as your gross rentals from commercial property does not exceed Rs 10 lakhs in a year. The limit of Rs 10 lakhs gets reset, at the beginning of the year. Presently, the service tax is collected at 15 per cent of the rent of commercial properties.

    Proposed provisions under the GST

    With the clubbing of taxes on goods and services, under the GST regime, the confusion about levy of separate tax on service and goods is done away with.

    Unlike under the present service tax regime, the threshold limit for applicability of GST has been increased from Rs 10 lakhs to Rs 20 lakhs. So, many of the landlords who were covered under the service tax regime, will go out of the indirect tax net, once the GST is implemented from the proposed date of July 1, 2017.

    It may be interesting to note that for the purpose of computing the aggregate limit of Rs 20 lakhs under the GST, all the taxable, as well as exempt goods and services supplied, shall be taken into account. So, unlike the service tax regime, where it is only the taxable services, which are taken into account for determining whether you have crossed the basic threshold, under the GST, the value of all the service and goods supplied in India, as well as exported, whether taxable or exempt, are taken into consideration for the Rs 20-lakh limit. The GST is proposed to be levied at 18 per cent, on the letting-out of commercial properties.

    There is one more major tax implication under the GST, with respect to rent on commercial properties. The parliament has borrowed the concept of ‘reverse charge mechanism’ from the service tax regime, under the GST. However, unlike in the service tax regime, where the reverse charge mechanism is applicable in case of services and is not extended to the sale or manufacturing of goods, the same is made applicable for goods as well as services, under the GST regime. A person who is registered under GST, who gets supplies of goods or services from a person who is not registered under GST, will have to pay the GST under the reverse charge mechanism. Under the service tax regime, there is no provision of reverse mechanism, with respect to the rent paid by the lessee. The proposed GST provisions, due to the increased rate and the levy under the reverse mechanism, will eventually make it costlier to take any commercial premises on rent.

    Provisions for tax deduction on income tax, for rented property

    In the case of service tax and GST, it is the landlord/owner of the property who has to collect the service tax/GST from the lessee on the rent charged, in case he is registered under these laws. Likewise, under the income tax laws, the lessee has to deduct income tax at source at 10 per cent, in case the rent for the property exceeds Rs 1.80 lakhs in a year. The limit of Rs 1.80 lakhs, applies on the landlord and not on the property, which is the subject matter of the lease. These TDS provisions are applicable for residential, as well as commercial properties. This provision is applicable, only if the lessee of the property is required to get his accounts audited, under Section 44AB of the Income Tax Act.

    The Budget 2017 has introduced one more provision, for the deduction of tax at source on rent, which is applicable for individuals and Hindu Undivided Families who are not required to get their accounts audited as discussed above. Such individuals and HUF will have to deduct tax at source, at the end of the year or at the end of the tenancy period, in case the tenancy gets terminated before the year end, at 5 per cent of the rent paid during the year, in case the aggregate value of the rent paid during the whole of the year exceeds Rs 50,000 per month.

    Read more about this : Goods and Service Tax Tutorial: Understand GST 2017 and Earn a Certification | ChalkStreet

    20.3k Views · 3 Upvotes






    Sonu Malik, Sr. Executive-F&A at Jubilant FoodWorks (2017-present)

    Answered May 19

    Dear I will tell by way of comparing current tax regime and GST on Rental Income:

    In current Tax regime:

    Non-applicability: The service tax is not charged on renting of vacant land, with or without a structure relating to agriculture, renting of residential dwelling units used as residence, renting out of property by Reserve Bank of India and renting out of property by a Government or a local authority to a non-business entity.

    2. Exemtion Limit : Service tax is not mandatory if the total value of services provided by the service provided is less than Rs.10 lakhs and the service tax is exempt on renting of precincts of a religious place meant for the public, renting of hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes whose tariffs are below Rs.1,000 per day and on renting of an exempt educational institution.

    3. Current Rate is 15%

    Now in GST:

    Non-applicability: As exemptions under GST are not notified yet so wait till today’s evening. Most probably Retal income on residential dwelling will be exempted.Exemtion limit is RS. 20 lac ( 10 Lacs in specified States) other limits for specified purpose will be notified today.Rate on service also will be notified today which expected to be 18% on Rental Income.

    Hope it will help you. I will give full details by tomorrow once the final rates and exemptions will be notified.

    54.3k Views · 19 Upvotes






    Suresh Jayaraman, CA-Final from The Institute of Chartered Accountants of India

    Answered Jun 27

    Currently, service tax is to be charged @15% on rental payments if the annual rent exceeds Rs 10 lakh in a year.

    Registration :

    Now, under GST, the limit for compulsory registration has been increased to Rs 20 lakh (rental income from all properties registered under the same PAN shall be considered for this purpose). It is Rs 10 lakh for specified states ( primarily north-eastern states ).

    But you cannot have a centralized registration if you have properties in many states; you have to obtain separate registration (state-wise).

    GST on rent : Renting of property for residential purpose is exempt in GST as was in service tax. But if you are renting your property to a any dealer for commercial purpose and cross the threshold limit, you have to charge GST @18% on the rental amount and issue a tax invoice periodically to the tenant. So, rent expenses will increase marginally (but not effectively).

    You need not collect GST on initial advances received, if they are refundable on termination of the rental agreement. But on termination, if you withhold any part of the advance for any reason, GST is to be charged on the amount withheld.

    Input tax credit :

    Now, even traders can claim input tax credit on GST paid on rent; so effective rent expenses will decrease.

    As the owner of the property, you can claim input tax credit on minor repair expenses . GST paid on major renovations, interior decorations, construction of new rooms and lifts cannot be claimed as input tax credit.

    However, you can claim 100% of GST paid on any furniture purchased and rented along with the property in the year of purchase itself.

    46.3k Views · 18 Upvotes · Answer requested by Chaitanya Inamdar






    Sunil Kumar, CA by Profession, GST by Practice

    Updated Jul 15

    1)Earlier, Rental income is subject to Service Tax if income was more than Rs 10 lakh in previous year.

    However, In GST, you have to check the limit of Rs 20 lakh. If you once crossed this limit, you have to pay tax every year on every rupee you earn. Till date, no such news came to give benefit like SSI exemption earstwhile in Service Tax.

    2) Further, rate of GST would be 18% on most of services, so landlord may find difficult to manage tenants, where tenants could force landlord to bear the extra burden by its own.

    3) Compliances will increase manifold in GST regime. Record keeping will increase, because GST return is more complex than Service Tax.

    Edited on 15 July 2017:

    Rental income from residential dwellings exempt under GST where such property is rented only for residential purposes

    Renting of hostel is also exempt where such hostel is owned and managed by a school/ college.

    30.9k Views · 6 Upvotes · Answer requested by Naga Subrahmanyam






    Ashfaq Hussain

    Aug 4

    Sir, this is Ashfaq Hussain from gulbarga Karnataka ,I have leased out my commercial property to gold loan company and been receiving a monthly rent of RS 30000 (thirty thousand) per month, and total of about RS 330000( three lakh thirty thousand) annually after deducting the TDS of 10% , after deducting building maintenance and repair cost on income at 30% , I get the refund also so I am not income tax payee, I never paid service tax also when the limit was RS 1000000( ten lakhs) as there is no other income source of me,. And not registered for GST also… so now the firm to whom I have leased out my commercial property deducting GST of 18% on my rent beside deducting the TDS of 10% …as the limit of GST on rental income is RS 2000000(twenty lakhs) , and my income is not more than 300000(three lakh) from all sources, how I am liable for GST ? And if I am not liable for GST then how can claim the deducted GST of 18% for the month of July 2017.please clear all this sir …. I am very much confused of all this …please answer all with a positive reply at the earliest.. waiting eagerly., thanking you

    • surendra says:

      My rental income Rs. 1327080/- per month Rs. 110590 without service tax, also my other called as salary and interest from firm, put together Rs. 900000/-per annum MY TOTAL INCOME EXCEEDS RS. 20/- LAKHS should I collect GST on rental income and already i registered with service tax. Kindly explain me whether I am coming under GST



    i am an owner of the small building & getting rs.1 lacs rental from difference firms. whether i am liable to collect gst, or i tenants are liable to deduct gst from the rent they are paying me

  11. Albert Pinto says:

    Individual option is not present under GST as on date. You have to register yourself as a proprietorship. This means no individual can hence forth rent out their property. Such a lack of tax wisdom on part of the GSTN people speaks volumes about the incompetency in drafting the system.

  12. Mangaluru urban development authority says:

    what is the rate of interest to renting of immovable property

  13. vishwajit says:

    i have registered gst tin under renting immovable property

    charges sgst cgst to tenents
    when we pay the gst can we allowed to tack input gst of following exp ipaid
    Grocery purchase

  14. vishwajit says:

    I have registered under GST on renting immovable property
    is my income my identity is individual i pay gst can i tack input credit of my telephone bill credit card bill & banking input gst or we purchase house hold item under gest
    can we allowed to tack input gst

  15. Ravi kumar says:

    Ours is a partnership firm engaged in retail of electronic goods namely televisions, refrigerators, washing machines etc. A hike in rental value is due next month after which we will attract gst on the rental amount we are paying for the commercial property. Can we claim input tax credit for the gst paid on the rental value?. Kindly clarify

  16. Kamal says:

    The scope of Supply as defined u/s 7 clearly states that the supply must be in the course or furtherance of business and thus supply as envisaged u/s 9(4) shall mean supply in the course or furtherance of business.

  17. Vishi says:

    We have a Property in chennai letted out for Commerical use, can anyone pls share the service Code and the GST rate applicable

    • Mohammed Ismail says:

      Since I was paying Service tax for rental income on a commercial Property earlier and now as my income from rental income is below 20Lakhs how do I proceed.
      A. do I have to surrender my Service Tax registration number.
      B. Do I have to register for GST even though my rental income is below Rs20Lakhs.
      C. What format should I use for raising an invoice on which I do not claim GST

  18. sahajwani says:

    please inform e me immovable property rental income GST RETE

    • Pardeep says:

      a flat was booked under construction in sep 2012
      to be completed with in 30 months.builder issued final demand letter without completing construction work with service tax @4.3% & others unwanted demands . for which repeated objections raised . After implimentation what will liabilty of taxes Pl clarify

  19. Amitabh says:

    I have my residence in Delhi. I have 2 leased commercial properties, one in Delhi and one in Gurgaon (Haryana).

    Query 1) If total rental for both is above Rs 20 lacs, then will I charge IGST for Gurgaon property (treating it as inter-state) and CGST/SGST for Delhi Property (treating it as intra-state)?

    Query 2) If total rent for both is less than Rs 20 lacs, will the Gurgaon Property be treated as inter-state and will it still be necessary to register under GST because the Gurgaon property is inter-state?

  20. Uday says:

    Sir,I am a proprietor of trading firm having my firm registered u/GST. 2 residential properties on my personal name; i have let on rent ,for being used as office premises for small firm on lease basis.I am earning@30000/- per month as a rent (annually @360000/- plz advise me whether i have to charge GST on rent.If yes at what rate & what will be HSN No.

    • SUNIL MODY says:


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