Gst on rent

GST on renting or leasing of:

1. Commercial property is a taxable supply;
2. Residential property for commercial purpose is a taxable supply;
3. Residential property for residential purpose is a exempted supply.

Referring to Notification No. 8/2017(IGST) at entry No. 16  rates for renting for commercial purpose services are taxed at 18%

& Refereeing the Notification No. 12/2017- Central Tax (Rate) Sr. No. 12 ... Heading 9963 or Heading 9972 .....Services by way of renting of residential dwelling for use as residence is NIL

The GST Act, has explicitly mentioned that renting of immovable property would be treated as supply of services. However, GST is applicable only on certain types of rent. In this article, we look at types of rent that attract GST in India.

The income obtained from renting out a residential or commercial property for a commercial purpose has been exempted up to INR 20 Lakhs. However, there would be no GST applicable if a house is given out for residential purposes, irrespective of the amount of income. Renting of properties is considered as a supply of services under the GST Act. Every commercial property is taxed at 18 per cent GST, and the place of supply would be the location of the immovable property.

Therefore, the GST Act considered that renting out an immovable property is treated as a supply of services. However, GST would apply to particular types of rent. They are listed below.

1. When an immovable property is given out on a lease, rent, easement, or licensed to occupy by the landlord.
2. When an immovable property is leased out as a commercial, industrial, or a residential property for business either partly or wholly.

The type as mentioned earlier of renting is considered a supply of services and would attract taxes.

Exemptions

The following are the exemptions of rental income obtained from an immovable property with regards to Goods and Service Tax.

1. When the landowner lets out the property for residential purposes.
2. When the rental income from a property that is not let out for commercial purposes does not exceed the threshold of INR 20 Lakhs annually.
3. When the rent earned by a registered charitable trust or a religious trust and the rent of a room is INR 10000 or less for a day.
4. When the rent earned by a registered charitable trust or a religious trust and the rent of the space, be it business units, shops, or community halls of such a charitable trust is INR 10,000 or less for a day.

GST TDS

The landowner of the property, which is given out on rent, would have to collect the GST TDS from the individual who pays the rent at the property. Therefore, GST would be charged on the rent obtained.  The rent payer has to deduct income tax at the source at 10 per cent if the rent of the property exceeds an amount of INR 1.8 Lakhs per year. The Tax Deduction at Source applies to residential as well as commercial properties. There would be no GST on Tax Deduction at Source.

It is vital to remember that the GST on rent charged for an immovable property by the Government or the Local Authority to a registered individual would be under the Reverse Charge Mechanism. However, when the property is rented out to an unregistered individual, the Gover

 

'RENTING OF IMMOVABLE PROPERTY"

As per Section 7 of CGST "Renting" cover under Supply in GST.

Further council has categorised the kind of Rent is Exempted, Taxable & Under RCM on the basis of Supplier & Nature of Rent.

1.As per Notification 8/2017 IGST: Commercial Rent : Taxable

2.Notification 12/2017 CT(R)
Residential Rent : Exempted

3. Notification 3/2018 CT (R)
Renting of Immovable Property By Govt to Registered Person is Under RCM