Applicable Tax on Residential Property Situated in Different State

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This discussion explores the Goods and Services Tax (GST) implications when a company registered in West Bengal rents out a residential property located in Odisha to another company for residential use. The core question is whether IGST (Reverse Charge Mechanism) or CGST-SGST (Reverse Charge Mechanism) applies, and who is liable for it. The advice suggests that if the property is used for residential purposes, GST might not be applicable if the revenue is below the threshold and there's no other business presence in Odisha. However, if it's a taxable supply, CGST+SGST of Odisha would apply, with Reverse Charge Mechanism only relevant if the supplier is unregistered.

Palash Ghosh

Palash Ghosh (Querist)

22 October 2024 Dear Experts,

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

Company having all his business and registration in West Bengal owns a residential property at Odisha.
The mentioned property rented out to a registered company of Odisha as residential property used for residential purpose only.

What will be the applicability of GST in the above mentioned scenario? Will it be IGST (RCM) or CGST-SGST(RCM) in the hands of Owner as well as Tenant?

Thanking you in advance for your suggestion.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

22 October 2024 Supply being at Odisha, you are require to register in Odisha and charge CGST+SGST, unless it is used for residential purpose only.

Palash Ghosh

Palash Ghosh (Querist)

23 October 2024 The property is let out as residential property and used for residential purpose only. There is no other business in Odisha. Total revenue earned form Odisha is below Rs.20 lacs and no tax liability is arising in Odisha.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

23 October 2024 As there is no tax liability in Odisha, you may not be required to register as on the day.

Palash Ghosh

Palash Ghosh (Querist)

24 October 2024 But my question is still unanswered.
What will be the applicability of GST in the above mentioned scenario? What tax will be recorded in Tax Invoice?
Will it be IGST (RCM) or CGST-SGST(RCM) in the hands of Owner as well as Tenant?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 October 2024 Whenever taxable supply, CGST+SGST of Odisha state will be applicable. RCM will apply only when supplier is URD, otherwise supplier has to charge under FCM.

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