Applicable RCM on Rent of Residential Property Situated in Different State

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This discussion explores the Goods and Services Tax (GST) implications when a property owner from West Bengal rents out a residential property in Odisha to a registered company. Key questions revolve around whether GST applies, specifically under Reverse Charge Mechanism (RCM), and whether IGST or CGST/SGST should be charged. The consensus leans towards GST being applicable under RCM, with IGST likely being the relevant tax if the supplier has no Odisha registration, as the supply is considered inter-state.

Palash Ghosh

Palash Ghosh (Querist)
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25 October 2024 Dear Experts,

Kindly share your views on the below described issue with notification/circular/case study:

Mr.X having all his business and registration in West Bengal owns a residential property at Odisha.
The mentioned property rented out to Mr.Y registered company of Odisha as residential property used for residential purpose only.
Mr.X have no business in Odisha. Total revenue earned form Odisha is below Rs.20 lacs and no tax liability is arising in Odisha.

What will be the applicability of GST in the above mentioned scenario? What tax will be recorded in Tax Invoice from Mr.X?
Will it be IGST (RCM) or CGST-SGST(RCM) in the hands of Mr.Y?

Thanking you in advance for your opinion.

Applicable Tax on Residential Property Situated in Different State

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)
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25 October 2024 1. Turnover should be seen entity level and not state wise turnover
2. Residential house given to company and not to the individual - so exemption will not be available , this case since it is residential property and Y is registered - Y has to Pay GST under RCM
Refer Notification - Notification No. 05/2022- Central Tax (Rate) | Dated: 13th July, 2022

Palash Ghosh

Palash Ghosh (Querist)
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26 October 2024 Kindly share your opinion that the invoice raised by X will be IGST (RCM) or without GST. Also whether Y will pay IGST (RCM) or CGST&SGST (RCM).
The matter is very urgent.

Akash Siby

Akash Siby (Expert)
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15 November 2024 IF Mr. X don't have registration in odisha it should be an interstate supply and IGST applicable. Both the parties are registered, and they can continue on forward charge.

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