RCM - commercial rent paid to URP under GST

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Quick Summary

New GST rules effective from October 10, 2024, mean that if you are a registered business renting commercial property from an unregistered landlord, you must now pay 18% GST under the Reverse Charge Mechanism (RCM). While this means the tenant is responsible for paying the GST, they can subsequently claim this as Input Tax Credit (ITC).

6380177036

6380177036 (Querist)

11 November 2024 Dear Sir,

We have a godown in Porur, and we pay rent every month after TDS is deducted. Recently, my friend mentioned that RCM is applicable for commercial rent payments to an unregistered person (URP). Could you please clarify my doubts?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

11 November 2024 Yes, Central Board of Indirect Taxes and Customs (CBIC) issued Notification No. 09/2024 – Central Tax (Rate) on October 8, 2024. This notification brings under the Reverse Charge Mechanism (RCM) the renting of commercial property when an unregistered person provides the service to a registered person, effective from October 10, 2024.
Starting from October 10, 2024, if the tenant is registered under GST and the landlord is unregistered, the tenant is required to pay 18% GST under RCM. The tenant can claim ITC for the amount paid under RCM.

6380177036

6380177036 (Querist)

11 November 2024 Thank you so much sir

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

11 November 2024 You are welcome.

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