Rental income from residential property has been kept out of preview of Goods and Service Tax (GST). But if you have any rental income from let-out of commercial property over 20 lakhs annually then it will attract GST. It means that you do not need to register or charge under GST unless your rental income exceeds 20 lakhs annually. The GST rate on let-out of commercial properties is 18%.

As per notification 8/2017, Purchases upto Rs. 5,000 per day from unregistered suppliers will not attract GST.  In other words, there is a reverse charge on buying from unregistered dealer/s if you are dealing with unregistered suppliers and making payments above Rs. 5,000 per day.

As per section 9 (4) of Central Goods and Service tax act which elaborates that if a registered person purchases goods/services from an unregistered dealer (URD) then the registered taxpayer is liable to pay GST on reverse charge basis. So the person paying rent (tenant) for commercial property needs to follow section 9(4) and charge GST under reverse charge mechanism on behalf of unregistered landlord.

Conclusion: Even if the threshold limit has been set for the landlord for charging GST on rental income but still the rental income will attract GST which will either be paid by the registered landlord or the registered tenant (under RCM).

GST on Transportation Services in India

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13 responses to “Rental Income from commercial property and Reverse Charge mechanism”

  1. Dr.Vishwanath says:

    Iam utilizing a space for Clinic.Owner says that i need to pay GST of 18% which is applicable is it required for me to pay that GST tax since the owner is obligated to pay for his commercial rental turn over more than 20lakhs per annum.
    Is it mandatory for the tenant to pay the GST tax of 18% on rent apart from paying the rent.
    Kindly clarify.
    Regards

  2. suresh Pandya. says:

    I am paying RENT TO Commercial propertyand also received so Iam applicable for reverese charges mech. I HAVE another income/ more than 20 lakhs so what is position.

  3. Rama Rao says:

    I am getting lease rent on commercial property is Rs. 7,20,000/- P.A.. However, the lease deed entered with lessee along with five other parties and the combined lease deed with annual lease rent is above Rs. 35 lakhs.

    Moreover, ownership of this property is independent. However, the lessee need for buyer for office space for convenience the total compound place is given for office purpose.

    Kindly confirm whether this transaction will attract GST.

    Regards

    Rama Rao

  4. Dillip Kumar Nanda says:

    Please tell me sir . Actually I have paid house rent per month Rs.15163 for Business purpose . . ,I want to know house rent applicable for GST 18% so. Kindly confirm to me . I have provide gst 18% to govt.

  5. VIJAY KHURANA says:

    My wife has rented out a commercial property in Gurgaon(Haryana) to a bank for running an “ATM”.Her total receivables on account of Services rendered (Within the GST Regime) is around Rs. 37500/= per month after 10% deduction towards Income Tax TDS by the Bank at source. Accordingly my wife clearly falls below the 20 Lacs threshold Limit for “GST REGISTRATION”.
    The Bank in a Mail sent to her asked her to provide to the Bank her “GSTIN” in order the same gets reflected in their account in GST Network (GSTR-2/2A) so that they can avail Input Tax Credit of GST paid by her.In case she remains an unregistered Dealer,The Bank has stated that they would be required to pay GST under “Reverse Charge Mechanism” and that my wife would not be entitled to receive or claim “GST” from the Bank under any circumstances.
    I,therefore , seek your guidance in the matter:
    a) Does she need to register herself ? And Where ?
    b) Does she have to raise Invoices on a monthly basis ?If so, What is the format ? And whose Liability would it be to pay “GST”,If at all, the same ought to be paid by someone falling below the “ Treshhold limit of 20 Lacs.”
    c) What is the best solution under the circumstances ?And Do I really need to have a “GST” software for a limited Transaction of rental from a commercial property wherein the Total receivables by an individual is not even 5 Lacs per annum aggregate of all receivables on account of Services rendered in one single State of the country

    VIJAY KHURANA
    MOBILE :-9818489260
    Landline:- 011-25557704

    • Somnath Varshney says:

      hello sir,
      as per your query you have not need to registered with gst. but if bank is not avail rcm and ask for your gstin than you had to need registered with gst.
      it is simply that you have to charge rent with gst to bank more discuss plz make a call on 9013574143

    • somnath says:

      plz dont b use this contact share by mistake

  6. Yasser says:

    I receive a rental commercial income of Rs 150000 per month and I’m not registered but my tenant is registered and I’m not crossing 20 Lakh turnover a year but my tenant says he needs to pay gst under rcm
    Kindly explain

    • Somnath Varshney says:

      hello sir,
      as per your query you have not need to registered with gst. but if tenant is not avail rcm and ask for your gstin than you had to need registered with gst.
      it is simply that you have to charge rent with gst to tenant more discuss plz make a call on 9013574143

  7. Murthy says:

    Yes you have to pay if you cross the daily exemption limit of Rs.5000/- pm for RCM. So, if you purchase goods or services for more than Rs.1,50,000/- ( 5000 x 30) including the RENT, then you to pay GST under RCM.
    If you have not crossed the limit of Rs.1,50,000/- for the month, then you need not pay GST on RENT under RCM.

  8. UAbhishek says:

    Sir can a businessman be registered under composition scheme if he has rental income from commercial property.

  9. Rishab says:

    Sir I am paying rent of 6000 per month for my shop.I have tto pay gst or not.

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