X

Rental Income from commercial property and Reverse Charge mechanism

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.

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

View Comments (16)

  • 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.

  • 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

  • I'm a registered dealer of manfacturing gingely oil.
    and also get rentel income of 15000 per annum from a vehicle.

    Is this Rent income attract Gst ? , RCM?

1 2 3
X

Headline

Privacy Settings