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Taxability of renting of Residential dwelling Under GST- Amended Vide NN-04/2022 and NN-05/2022.

Renting of residential dwelling for the purpose of residence was earlier exempted. However, the exemption on such service has been withdrawn by the CG with effect from 18.07.2022 vide NN-04/2022 dated 13.07.2022. So now onwards renting of residential property for the purpose of residence is also taxable if the recipient of service is registered under GST.

Section 11 of the CGST ACT empowers the CG ,to notify certain goods and services which will be exempted from GST.By using this power , CG had issued NN-12/2017 exempting various goods and services. As per sl no 12 of NN-12/2017, renting of residential dwelling for the purpose of residence was exempted.

However, CG amended sl. No 12 of NN-12/2017 vide NN-04/2022 dated 13.07.2022 and added the words “except where the residential property is rented to a registered person”. As a result of such amendment, if the residential property is rented to a registered person even if for the purpose of residence, it is chargeable to GST. If the residential property is rented to an unregistered person for the purpose of residence, then it will be exempted from tax as earlier.

Taxability of renting of residential dwelling for the purpose of residence Under RCM

AS per Section 9(3) of CGST Act, CG may notify certain goods and service on which GST shall be paid by the recipient of service.CG vide notification no 13/2017 had notified various goods and services where tax to be paid by the recipient of service.

Now, CG has amended the notification no 13/2017, and added a new entry as 5A in the said notification which states that, residential dwelling for the purpose of residence shall be taxed under RCM if the recipient of service is a registered person.

Conclusion:

If the residential dwelling is rented to a registered person for the purpose of residence then it is taxable and the recipient of such service will pay tax on such on RCM.Again if the residential dwelling is rented to an unregistered person for the purpose of residence then it will be exempted vide NN-12/2017 as amended vide NN-04/2022 dated 13.07.2022.

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