Reverse charge applicability unregestered person
This query is : Resolved
30 August 2017
Suppose i am a company with more than 20 lakhs turnover all india.
I have no outward supplies in one state , but have an office for which the landlord is unregistered.
Can i be an unregistered distinct person in that state and enjoy zero tax in the rent transaction.
regards
I have no outward supplies in one state , but have an office for which the landlord is unregistered.
Can i be an unregistered distinct person in that state and enjoy zero tax in the rent transaction.
regards
09 September 2017
pls help with resolution.
22 July 2025
This is a classic GST (Goods and Services Tax) question regarding unregistered persons and reverse charge in India.
Scenario Summary:
You are a company (registered taxpayer) with turnover over ₹20 lakhs (so registered under GST).
You have no outward supplies in a particular state but have an office there.
The landlord (supplier of rent service) is unregistered in that state.
Question: Can you be treated as an unregistered distinct person in that state and pay zero tax on rent?
Explanation:
Distinct Person under GST:
Under GST, if a taxpayer has multiple places of business in different states, each place is treated as a distinct person and needs to be registered separately in each state where business is conducted.
Registration Requirement:
If you have an office in a state, you are required to have registration in that state even if you have zero outward supplies there.
The threshold limit of ₹20 lakh is aggregate turnover in all states for registration eligibility.
But once you have business presence in a state (like an office), you cannot avoid registration in that state.
Tax on Rent from Unregistered Landlord:
If the landlord is unregistered and providing services (rent), then reverse charge mechanism (RCM) applies.
Under RCM, the recipient of service (your company) must pay GST on rent to the government.
Since landlord is unregistered, no output tax is charged by landlord.
Your company has to pay GST on the rent under reverse charge.
Can You Be ‘Unregistered Distinct Person’ and Pay Zero Tax?
No, if you have a place of business in that state, you must register.
If you are registered, you cannot be an unregistered distinct person in that state.
Even if landlord is unregistered, reverse charge applies — you pay GST on rent.
Summary:
Question Answer
Can you avoid registration in that state? No, office presence mandates registration
Can you treat yourself as unregistered there? No, if office is there, you must register
Tax liability on rent from unregistered landlord? GST payable by you under reverse charge
Additional note:
The registered recipient (you) will claim input tax credit on the GST paid under reverse charge, if rent is for business use.
Scenario Summary:
You are a company (registered taxpayer) with turnover over ₹20 lakhs (so registered under GST).
You have no outward supplies in a particular state but have an office there.
The landlord (supplier of rent service) is unregistered in that state.
Question: Can you be treated as an unregistered distinct person in that state and pay zero tax on rent?
Explanation:
Distinct Person under GST:
Under GST, if a taxpayer has multiple places of business in different states, each place is treated as a distinct person and needs to be registered separately in each state where business is conducted.
Registration Requirement:
If you have an office in a state, you are required to have registration in that state even if you have zero outward supplies there.
The threshold limit of ₹20 lakh is aggregate turnover in all states for registration eligibility.
But once you have business presence in a state (like an office), you cannot avoid registration in that state.
Tax on Rent from Unregistered Landlord:
If the landlord is unregistered and providing services (rent), then reverse charge mechanism (RCM) applies.
Under RCM, the recipient of service (your company) must pay GST on rent to the government.
Since landlord is unregistered, no output tax is charged by landlord.
Your company has to pay GST on the rent under reverse charge.
Can You Be ‘Unregistered Distinct Person’ and Pay Zero Tax?
No, if you have a place of business in that state, you must register.
If you are registered, you cannot be an unregistered distinct person in that state.
Even if landlord is unregistered, reverse charge applies — you pay GST on rent.
Summary:
Question Answer
Can you avoid registration in that state? No, office presence mandates registration
Can you treat yourself as unregistered there? No, if office is there, you must register
Tax liability on rent from unregistered landlord? GST payable by you under reverse charge
Additional note:
The registered recipient (you) will claim input tax credit on the GST paid under reverse charge, if rent is for business use.
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