If a registered dealer or a service provider gets supply or service from an unregistered dealer or service provider taxable goods or services and the value of supply is more than Rs. 5,000/- in a day, the service receiver has to pay GST at the rates applicable for the goods or services received and he can claim credit by deducting the same in the GST payable by him.

Instead of getting supply or service from an unregistered supplier, which results in payment of applicable GST on the services or goods received, most of the Service Receivers insist the supplier to get them registered though they are not obliged to register due to the reason that their gross turnover is going to be less than Rs. 20 Lakhs per year. Compelling the small business operators to register will be great hardship to them.

Now another blow is that some of service receivers especially big corporates who pay commercial rent compel the land lords to register under GST and they have gone to the extent of sending notices to the effect that GST @ 18% would be deducted from rent payable from 01.07.2017 if the landlords fail to get them registered. Though they can claim deduction of GST paid on such services and which would not in any financial loss to them, why they resort to such drastic method is not known.

Since deduction of GST is violation of law suitable clarification or public notice may be issued to save the poor land lords from the Big Corporates to make it clear that deduction would attract severe action from the law enforcing authority.

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  1. Ananth Alwar says:

    Sir, if the Corporates ask to register the landlord under GST, basically they are simply try to shift the responsibility of maintaining taxable transaction to landlord eventhough they employed people and experts infact might have created separate dept. Instead of RCM now landlord needs to bill the rent with 20000 (for eg:) + 3600 as tax.. I understand the hardship landlord going to have, by registering and maintaining the tax receipts and return filings. I agree with your point. I hope more amount for govt talking to business community or advertising faqs or warning might reduce this inconvenience to landlord


    I am having one set of commercial building given on rent to a Bank at rent of Rs. 47000/- pm. Till date bank is crediting my rent in my savings bank directly without any problem. Now whether it is necessary to have GSTIN for me and if so the rent will be increased by the amount of service tax. Plz guide.

    1. CA. M. Lakshmanan says:

      If all your receipts i.e taxable as well as taxable are likely to exceed Rs. 20 Lakhs per year you have register and collet the Rent plus 18% GST.But if all the turnover is less than Rs. 20Lakhs you need not register the Bank has to pay GST under RCM direcyly to the Govt. and claim credit for the same in GST payable by them. Even if you register and collect rent plus GST the bank will pay you GST and claim credit for the same in the GST payable by them. You have to pay the GST collected and file monthly returns.

  3. Shraddha says:

    If i have rented my (immovable) Property to Mr. A for business purpose charging him 18% GST now How can i set off ITC if the recipient is registered as well if he is not registered under renting system?


    My client has received letter from Kotak Mahindra Bank stating that they will pay GST on premises let out to them and deduct the same from rent payable to my client. My client has let out small premises for ATM and receiveing rent Rs. 45000/- Per month ie yearly Rs. 540000/- which is below the thresshold limit of. Rs. 20laks. Kindly let me know the correct Section under with they are not liable to deduct such amount.

  5. pmr. gowrissankar says:

    You should send the letter if any, to GST council so that they can amend the act.At trichy, a person selling Amul icecream has closed his business and he has affixed one notice on door that the shop is permanently closed due to GST(Rate 18%)

    1. CA. M. Lakshmanan says:

      Dear Mr. Dheeraj,
      Here the word POOR does not have literal meaning; for example if a land lord has got income of Rs.20,000/- per month (annual income will be Rs. 2,40,000, much below the GST turnover limit of Rs. 20 Lakhs ) they are compelled by the tenants to undergo the cumbersome process of regn. collection & Payment of GST, filing returns etc. and thus they suffer; hence mentioned as poor.

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November 2020